At the end of the year,NewBiscuit company has inventory in hand at a selling price of £10,500.What was the cost of inventory assuming inventory is marked up at 50%?
A) £5,250
B) £8,000
C) £3,000
D) £7,000

Question

Quizplus · Accepted Answer

If the selling price of the inventory is £10,500 and it's marked up at 50%, then the cost of inventory would be 100% - 50% = 50% of the selling price.

Cost of inventory = 50% of £10,500 = £5,250

However, the inventory is already in hand and it's valued at the selling price of £10,500. This means that the inventory was sold at a markup of 100%, not 50%.

So, the original cost of the inventory would be half of the selling price, which is:

Original cost of inventory = £10,500 ÷ 2 = £5,250

Therefore, the correct answer is D) £7,000, which is not an option in the given choices.

At the End of the Year,NewBiscuit Company Has Inventory in Hand