A business uses $20 \%$ mark up to arrive at its selling prices. During the year it made purchases of $\$ 35000$ and the inventory decreased from \$7000 to \$2000. What was the revenue for the year?
Explanation
To find the revenue, we need to calculate the cost of goods sold. The cost of goods sold is the cost of purchases plus the opening inventory minus the closing inventory. The cost of purchases is $35000, the opening inventory is $7000, and the closing inventory is $2000. So, the cost of goods sold is $35000 + $7000 - $2000 = $32000. The selling price is the cost of goods sold plus the mark up. The mark up is 20% of the cost of goods sold, which is 0.2 x $32000 = $6400. So, the selling price is $32000 + $6400 = $38400. The revenue is the selling price multiplied by the number of units sold. However, the number of units sold is not given. Assuming the number of units sold is 1, the revenue is $38400.
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