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WAEC Accounting 2017 Paper

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Question : 30

Total: 50

A trader sells goods at an average margin of 20%. His cost of sales for the month amounted to N720,000. What is his profit figure?

N900,000
N864,000
N840,000
N180,000

Solution:

Concept:

Margin is profit expressed as a percentage of selling price, not cost price.

Explanation:

Average margin

= 20\%

means profit is

20\%

of sales.

If sales

= 100

, then cost of sales

= 100 - 20 = 80

.

Actual cost of sales is

N720,000

.

Let sales be

S

. Then

80\%

of

S = 720,000

.

S = \frac{720,000}{80/100} = N900,000

.

Profit

= \text{Sales} - \text{Cost of sales}

.

Profit

= 900,000 - 720,000 = N180,000

.

Answer:

D. N180,000

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