Question

Two ways to find the total cost of sales (e.g., sales were $100,000, and sales return was $10,000, markup 50%):

A. $60,000; Subtracting returns and applying the markup.
B. $75,000; Adding returns and applying the markup.
C. $50,000; Subtracting returns without applying the markup.
D. $110,000; Adding returns and not applying the markup.

Answer 1

The correct way to find the total cost of sales in this case is option B, which is $75,000. You need to add the returns to the sales and then apply the markup percentage.

Step-by-step explanation:

The correct way to find the total cost of sales in this case is option B, which is $75,000. To calculate the total cost of sales, you need to add the returns to the sales and then apply the markup percentage. In this example, the sales were $100,000, the sales return was $10,000, and the markup percentage was 50%. So, adding the returns to the sales would give us $100,000 + $10,000 = $110,000. Then, applying the markup of 50% to $110,000 we get $110,000 x 50% = $55,000. Finally, adding the markup to the sales return gives us $55,000 + $10,000 = $75,000.