WAEC Accounting 2016 Paper

Concept:Gross profit is expressed as a percentage of cost price, so convert it into a fraction of selling price before subtracting it from sales.Explanation:Let the cost price be $C$.Profit on cost is $33\frac{1}{3}\% = \frac{1}{3}$ of cost.So, selling price $= C + \frac{1}{3}C = \frac{4}{3}C$.Given selling price $= GH¢36,240$.Thus, $\frac{4}{3}C = 36,240$.Therefore, $C = 36,240 \times \frac{3}{4} = 27,180$.Alternatively, convert the markup to margin:Profit as a fraction of selling price $= \frac{\frac{1}{3}}{1 + \frac{1}{3}} = \frac{1}{4}$.Profit $= \frac{1}{4} \times 36,240 = 9,060$.Cost price $= 36,240 - 9,060 = 27,180$.Answer:Cost price is GH¢27,180, which is option C.