1.1. CALCULATIONS Cost of sales – A cost/expense incurred in selling the product CALCULATION OF COST OF SALES Cost of sales = Sales x Cost (100) Cost (100) + mark-up Cost of sales is always equal to 100% NB: When calculating cost of sales mark-up% is below! EXAMPLE: The percentage mark-up is 25% on the cost price. Then you accept that the Cost price is 100%. Calculate the cost of sales if the profit mark-up is 25% and the selling price is R3 000. GP = 25 % CP = 100 % SP = 125% IT IS ALWAYS THE UNKNOWN DIVIDED BY THE KNOWN (THE UK METHOD) CREMORA METHOD… What you are looking for IS ON TOP ANSWER: 3 000 X 100 100+25 = R2 400 GDE | MGSLG – EMS GRADE 9 FINANCIAL LITERACY 1 *33β = 3 x 33 = 99 + 1 = 100 = 33,333333333 3 *66β = 3 x 66 = 198 + 2 = 200 = 66,666666666 3 GDE | MGSLG – EMS GRADE 9 FINANCIAL LITERACY 2 EXAMPLE No Cost Price Profit Mark Up (%) Selling Price 1 R18 000 33β ? CALCULATIONS 4 18 000 π 1 = 3 π 24 000 Check the calculations below 2 ? 66β R15 000 3 15 000 π 1 = 5 3 R9 000 ? R15 000 15 000 – 9 000 = R6000(Gross profit) π 9 000 Check the calculations below 6 000 x 100 = 66β 9 000 CALCULATIONS CALCULATIONS Cost =100 Cost =100 Mark – up =33β Mark – up =66 β Selling price =133β Selling price =166 β To calculate the selling price our formula/calculations πππβ πππβ are: π ππ πππ (We need to simplify ) πππ πππ πππ 133β is the same as π Cost of sales is : πππ = πππβ π ππ πππ (πππ π π +π) π Our formula πππ πππ ÷ = π. π πππππ π ππππ ππ ππ ππππ (ππ ππππ) π π πππ πππ ÷ π ππ πππ π π πππ π πππ π π π π π πππ = πππ πππ OR 100 has changed to a denominator and the sign changed to multiplication π π π π πππ π ππ πππ π ππ πππ = 9 000 GDE | MGSLG – EMS GRADE 9 FINANCIAL LITERACY 3 To calculate the cost of sales : πππ πππβ OR πππ π π π πππ = πππ π πππ ÷ π (Note ,this is a denominator ) π π ππ πππππππππ πΊππππ πππ πππ πͺπππ ππ πΊππππ π π You can follow the steps reflected in adjacent workings π π π π ππ πππππππππ πΊππππ πππ πππ πͺπππ ππ πΊππππ π π 1.6 Activity: Calculations of cost of sales Important note when calculating cost of sales 20% use 5/6 25% use 4/5 33β % use ¾ 66β use 3/5 Table 1.2: Calculate the Cost of sales in each of the following and show your calculations: No. Sales Mark-up% 1 R400 25% 2 R250 25% 3 R350 40% 4 R200 60% Calculations Cost of sales GDE | MGSLG – EMS GRADE 9 FINANCIAL LITERACY 4 5 R360 33β % 6 R500 100% 7 R2 800 35% 8 R1 200 20% 9 R3 500 40% 10 R4 800 50% 1.2. Prior Knowledge WHAT DO YOU UNDRETSAND BY THE TERM SALES/SELLING PRICE? ___________________________________________________________________________ _________ ___________________________________________________________________________ _________ ___________________________________________________________________________ _________ ___________________________________________________________________________ _________ GDE | MGSLG – EMS GRADE 9 FINANCIAL LITERACY 5 CALCULATIONS OF SALES Sales – money received from goods sold. Goods are sold at cost plus mark-up %. Sales = Cost of sales x Cost (100) + mark-up Cost (100) NB: When calculating sales mark-up% is Above! EXAMPLE: The percentage markup is 50% on the cost price. Then you accept that the Cost price is 100 %. Calculate the selling price if the profit mark-up is 50 % and the Cost price is R3 000. GP = 50 % CP = 100 % SP = 150 % IT IS ALWAYS THE UNKNOWN DIVIDED BY THE KNOWN (UK METHOD) ___________________________________________________________________________ _________ ___________________________________________________________________________ _________ ___________________________________________________________________________ _________ ___________________________________________________________________________ ______ 1.7 Activity: Calculations of sales Table 1.3: Calculate Sales in each of the following and show your calculations: GDE | MGSLG – EMS GRADE 9 FINANCIAL LITERACY 6 No. Cost Price Markup% 1 R450 20% 2 R175 20% 3 R280 40% 4 R240 33β % 5 R75 66β % 6 R720 10% 7 R800 15% 8 R990 30% 9 R600 35% 10 R500 45% Calculations Sales GDE | MGSLG – EMS GRADE 9 FINANCIAL LITERACY 7 1.3. Prior Knowledge WHAT DOES THE TERM PROFIT MEAN? ___________________________________________________________________________ _________ ___________________________________________________________________________ _________ ___________________________________________________________________________ _________ ___________________________________________________________________________ _________ CALCULATIONS OF PROFIT MARK-UP PERCENTAGE Profit Mark up % is the profit made after selling the goods. Take the selling price subract cost pricce Selling price – Cost price = Profit Profit percentage = Profit /Cost PriceXCost Price EXAMPLE: If the Selling price is R10 000 and the Cost Price is R8 000, then calculate the profit mark-up. Selling price – Cost price = Profit; Divide Profit by Cost price x 100 _______________________________________________________________________ _________ GDE | MGSLG – EMS GRADE 9 FINANCIAL LITERACY 8 _______________________________________________________________________ _________ _______________________________________________________________________ _________ _______________________________________________________________________ _________ 1.8 CALCULATION OF PROFIT MARK-UP/PROFIT PERCENTAGE Table 1.4: Calculate Profit made in each of the following: Mark-up% Calculations No. Cost Price Sales 1 R1 000 R1 100 2 R1 150 R1 380 3 R4 000 R5 000 4 R3 310 R4 600 5 R3 450 R3 783 6 R885 R1 475 7 R2 750 R5 500 GDE | MGSLG – EMS GRADE 9 FINANCIAL LITERACY 9 8 R6 200 R8 680 9 R7 500 R 10 875 10 R7 500 R12 475 GDE | MGSLG – EMS GRADE 9 FINANCIAL LITERACY 10
