Africa Traders is not a registered VAT vendor and buys and sells furniture. Africa Traders sold a dining room table for R17 500. The mark-up percentage on cost is 5%.What is the profit the entity will make on this product?Instructions for numeric response:1. Please round your answer to the nearest rand (eg: 1000)2. Only show the amount, do not show the "R" (eg: 1000)
Question
Africa Traders is not a registered VAT vendor and buys and sells furniture. Africa Traders sold a dining room table for R17 500. The mark-up percentage on cost is 5%.What is the profit the entity will make on this product?Instructions for numeric response:1. Please round your answer to the nearest rand (eg: 1000)2. Only show the amount, do not show the "R" (eg: 1000)
Solution
To calculate the profit, we first need to find out the cost price of the dining room table. We know that the selling price is R17 500 and the mark-up percentage on cost is 5%.
The formula to calculate the cost price is:
Cost Price = Selling Price / (1 + Mark-up Percentage)
Substituting the given values into the formula:
Cost Price = 17500 / (1 + 0.05) = 16666.67
Now, to calculate the profit, we subtract the cost price from the selling price:
Profit = Selling Price - Cost Price
Profit = 17500 - 16666.67 = 833.33
Rounding to the nearest rand, the profit the entity will make on this product is 833.
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