Pradeep is a trader. He provided the following information:
                                                                                                  $
Inventory at cost on 1 August 20–5 .......................     1,600

For the year ended 31 July 20–6:
Purchases ...............................................................      39,200
Revenue .................................................................       48,000

On the evening of 31 July 20–6 a fire destroyed a quantity of goods. The cost of the goods salvaged from the fire was $700.

Pradeep marks up the goods by 25% on cost when calculating the selling price.

a. Calculate, by means of a trading account section of an income statement, the cost of the goods which were destroyed.
b. Explain the difference between mark-up and margin.
c. Calculate Pradeep’s rate of inventory turnover. Use the total inventory before the fire on 31 July 20–6 when calculating the average inventory.
d. State what the answer to the calculation in c indicates.