Mark Up- & Margin (HELP PLEASE!!!!!!!!)

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Hi

I have spent the past couple of days studying this subject only (sad I know).

I have taken notes from 4 different sources, but please can someone give me 4 quick and easy pointers so that I can remember how to....

Mark-Up; Calculate Sales when only Cost of Sales is known.

Mark-Up; Calculate Cost of Sales when only Sales is known.

Margin; Calculate Sales when only Cost of Sales is known.

Margin; Calculate Cost of Sales when only Sales is known.

I am able to do the questions whilst I am studying, but the moment I go back to them after a while all is lost. If I can nail this topic I would feel so much happier about the forthcoming exam.

Am I a lost cause??

All advice very welcome.

Thanks in advance.

Tracy

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Mark Up- & Margin (HELP PLEASE!!!!!!!!)

    i'll try and explain how i've been remembering this as it is also something that had me confused.

    With mark up I picture the pofit and loss sheet and know that when doing mark up on cost, cost is the 100% as I visualize and arrow going up to sales thus meaning that if markup is 20% sale is up on cost by 20%

    sale 120%
    cost 100% ^
    profit 20%

    I Hope this helps a little and if I've confused you more i'm sorry
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Mark Up- & Margin (HELP PLEASE!!!!!!!!)

    Hi Lynmi

    No, you haven't confused me further!!! I totally understand what you are saying, and can remember that, it's working in reverse and trying to remember different formulas for Sales and Cost of Sales that I struggle with.

    However, after becoming brain dead looking at it over the past couple of days, I awoke with a clearer head this morning, and think I have managed to come up with a way to remember them which works for me.

    Unfortunately at this point in time I cannot think of a short version to post on here as to how I have done it,all I know is that I have tried it out on some questions to which I have the answers for and it works!! :?

    Maybe later when my brain starts catching up again, I will be able to post it here to help others out!

    Thanks again for your advice.

    Take care,

    Tracy


  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Mark Up- & Margin (HELP PLEASE!!!!!!!!)

    I remembered it like this:

    If:
    Cost of Sales + Gross profit = Sales
    (this also means:
    Sales - Cost of Sales = Gross Profit
    Sales - Gross Profit = Cost of Sales)

    For Mark up, Cost of sales is the 100% figure
    For Margin, Sales is the 100% figure.

    The mark up or margin would represent your profit figure.

    So if the Mark up was 25% for example

    Cost of Sales 100%
    + Profit 25%
    = Sales 125%

    If the Margin was 25%

    Cost of Sales 75%
    + Profit 25%
    = Sales 100%

    e.g.

    If the Cost of Sales are 15,000, and Mark up is 25%

    Cost of Sales 100% = 15,000
    + Profit 25% of 15000 = 3,750
    = Sales 125% of 15000 = 18,750


    If Sales are known and they are 15,000 and Margin is 25%

    Cost of Sales 75% of 15,000 = 11,250
    + Profit 25% of 15,000 = 3,750
    = Sales 100 % = 15,000

    Hope this helps!

    Debbie :D
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Mark Up- & Margin (HELP PLEASE!!!!!!!!)

    Thank you Debbie

    I'll admit this is the way I had managed to figure it out, however unlike your good self I couldn't explain it!!

    Thanks for taking the time to post your explanation as I am sure there are many people (myself included), who will be very grateful to you for explaining it so well.

    Take care, and hope you have a great Bank Holiday weekend!!

    Tracy

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