Question

Year 8 Business Studies Tutorial Questions
1. Oriyomi ,a well- known wholesalers bought the following from a food manufacturing company in
Lagos at various prices
A. Three (3) bags of Rice at #80000 per bag.
B. Two (2) cartons of Tuoyo Cereals at ₦10,000 per carton.
C. Four (4) Brigo seasoning at ₦3000 per carton.
Assuming all of these are sold at the following prices:
A bag of rice is sold at ₦84000
A carton of Tuoyo Cereal is sold at ₦11000
A carton of Brigo seasoning at ₦3500
Note: Selling and Distribution Expenses amounts to ₦5000
Calculate the following :
a. Cost of Sales
b. Sales Turnover
c. Gross Profit
d. Mark- up
e. Margin
f. Net profit.

Answer 1

To calculate the requested financial metrics for Oriyomi, we will follow these steps:

### 1. Calculate the Cost of Sales

**Cost of Sales** refers to the total cost incurred to purchase the goods sold during the period.

**Given:**

- Cost of Rice = 3 bags × ₦80,000 per bag = ₦240,000
- Cost of Tuoyo Cereals = 2 cartons × ₦10,000 per carton = ₦20,000
- Cost of Brigo Seasoning = 4 cartons × ₦3,000 per carton = ₦12,000

**Total Cost of Sales:**

\[
\text{Cost of Sales} = \text{Cost of Rice} + \text{Cost of Tuoyo Cereals} + \text{Cost of Brigo Seasoning}
\]

\[
\text{Cost of Sales} = ₦240,000 + ₦20,000 + ₦12,000 = ₦272,000
\]

### 2. Calculate the Sales Turnover

**Sales Turnover** is the total revenue from sales.

**Given:**

- Sales Revenue from Rice = 3 bags × ₦84,000 per bag = ₦252,000
- Sales Revenue from Tuoyo Cereals = 2 cartons × ₦11,000 per carton = ₦22,000
- Sales Revenue from Brigo Seasoning = 4 cartons × ₦3,500 per carton = ₦14,000

**Total Sales Turnover:**

\[
\text{Sales Turnover} = \text{Revenue from Rice} + \text{Revenue from Tuoyo Cereals} + \text{Revenue from Brigo Seasoning}
\]

\[
\text{Sales Turnover} = ₦252,000 + ₦22,000 + ₦14,000 = ₦288,000
\]

### 3. Calculate the Gross Profit

**Gross Profit** is the difference between the Sales Turnover and Cost of Sales.

\[
\text{Gross Profit} = \text{Sales Turnover} - \text{Cost of Sales}
\]

\[
\text{Gross Profit} = ₦288,000 - ₦272,000 = ₦16,000
\]

### 4. Calculate the Mark-up

**Mark-up** is calculated as the Gross Profit expressed as a percentage of the Cost of Sales.

\[
\text{Mark-up} = \left( \frac{\text{Gross Profit}}{\text{Cost of Sales}} \right) \times 100\%
\]

\[
\text{Mark-up} = \left( \frac{₦16,000}{₦272,000} \right) \times 100\% \approx 5.88\%
\]

### 5. Calculate the Margin

**Margin** is calculated as the Gross Profit expressed as a percentage of Sales Turnover.

\[
\text{Margin} = \left( \frac{\text{Gross Profit}}{\text{Sales Turnover}} \right) \times 100\%
\]

\[
\text{Margin} = \left( \frac{₦16,000}{₦288,000} \right) \times 100\% \approx 5.56\%
\]

### 6. Calculate the Net Profit

**Net Profit** is the Gross Profit minus Selling and Distribution Expenses.

**Given:**

- Selling and Distribution Expenses = ₦5,000

\[
\text{Net Profit} = \text{Gross Profit} - \text{Selling and Distribution Expenses}
\]

\[
\text{Net Profit} = ₦16,000 - ₦5,000 = ₦11,000
\]

### Summary of Results

- **Cost of Sales**: ₦272,000
- **Sales Turnover**: ₦288,000
- **Gross Profit**: ₦16,000
- **Mark-up**: 5.88%
- **Margin**: 5.56%
- **Net Profit**: ₦11,000