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WAEC Accounting 2024 Paper

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Question : 25

Total: 50

Use the following information to answer this question.

The margin for a business is 2/5 and the cost of sales is \$ 120,000.

\$216,000.
\$204,000.
\$ 200,000.
\$ 192,000.

Solution:

Concept:

Margin means profit as a fraction of sales:

\text{Margin} = \frac{\text{Profit}}{\text{Sales}}

.

Explanation:

Given margin

= \frac{2}{5}

, profit is

\frac{2}{5}

of sales.

So, cost of sales

= \text{Sales} - \text{Profit}

.

Thus, cost of sales

= \text{Sales} - \frac{2}{5}\text{Sales} = \frac{3}{5}\text{Sales}

.

Cost of sales is

120{,}000

.

Therefore,

\frac{3}{5} \times \text{Sales} = 120{,}000

.

\text{Sales} = 120{,}000 \times \frac{5}{3} = 200{,}000

.

Answer:

Sales

= \$200{,}000

.

Correct option: C.

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