To determine the percentage of gross profit on sales, we first need to understand the concepts involved and then perform the necessary calculations step-by-step.
Step 1: Understand the Terms
- Turnover (Sales): This is the total revenue generated from selling goods or services. In this case, the turnover is N15,000.
- Cost of Goods Sold (COGS): This represents the direct costs attributable to the production of the goods sold by the company. Here, the COGS is N10,000.
- Gross Profit: This is calculated as the difference between turnover and COGS. It represents the profit a company makes after deducting the costs associated with making and selling its products.
Step 2: Calculate Gross Profit
To find the gross profit, we use the formula:
[
\text{Gross Profit} = \text{Turnover} - \text{Cost of Goods Sold}
]
Substituting the values we have:
[
\text{Gross Profit} = N15,000 - N10,000 = N5,000
]
Step 3: Calculate the Percentage of Gross Profit on Sales
Next, we need to find the percentage of gross profit relative to sales. The formula for calculating the percentage of gross profit on sales is:
[
\text{Percentage of Gross Profit} = \left( \frac{\text{Gross Profit}}{\text{Turnover}} \right) \times 100
]
Substituting the values we calculated:
[
\text{Percentage of Gross Profit} = \left( \frac{N5,000}{N15,000} \right) \times 100
]
Calculating the fraction:
[
\frac{N5,000}{N15,000} = \frac{1}{3} \approx 0.3333
]
Now, multiplying by 100 to convert it to a percentage:
[
0.3333 \times 100 = 33.33\%
]
Conclusion
Thus, the percentage of gross profit on sales is
33.3%. Therefore, the correct option is
B. 33.3%.
Explanation of Other Options
- Option A: 23.3%: This percentage is incorrect because it does not accurately reflect the gross profit calculated. It may arise from a miscalculation or misunderstanding of the gross profit formula.
- Option C: 50.0%: This option suggests that half of the turnover is gross profit, which is not supported by the calculations. The gross profit is significantly lower than half of the turnover.
- Option D: 66.6%: This option implies that two-thirds of the turnover is gross profit, which is also incorrect based on the calculated gross profit of N5,000.
Common Pitfalls
- Misunderstanding Gross Profit: Some students confuse gross profit with net profit, which includes other expenses like operating costs, taxes, etc.
- Calculation Errors: Ensure that you perform the arithmetic correctly, especially when converting fractions to percentages.
- Ignoring the Formula: Always remember to use the correct formula for calculating gross profit and its percentage.
Revision Summary
- Gross Profit = Turnover - Cost of Goods Sold.
- Percentage of Gross Profit = (Gross Profit / Turnover) × 100.
- In this case, Gross Profit = N5,000 and Turnover = N15,000 leads to a percentage of 33.3%.
- The correct answer is B. 33.3%; other options are incorrect due to miscalculations or misunderstandings.