fra exam

sid
sid Registered Posts: 7 Regular contributor ⭐ ? ⭐
Does anyone have an easy way of remembering profit margins and markups calculations for incomplete records. tutor gave us one example to work from, just when I think ive sorted it I get it wrong.

:confused1::confused1::confused1:

Comments

  • Manac Les
    Manac Les Registered Posts: 5 Regular contributor ⭐ ? ⭐
    Gin is more expensive than seven up

    Don't know if this would help because I was having problems with this myself.

    I have been told by my lecturer that she remembers the relationship between Cost of Sales, Profit (or Margin) and Sales is that Gin is more expensive than seven-up. Specifically, that MarGIN is always greater than mark(seven)up.

    This kind of helped me get my head round the relationship aspect.

    She then went through a costing exercise whereby we had the COS figure with margin required of 25%. As margin relates to Sales we had to work backwords, basing the calculation on sales = 100% and margin is 25%, then COS must be 75%. This means margin must be 25/75ths, which equates back to the common method of instruction where if margin is 1/4, the markup is 1/3.

    Reading this all back makes it seem even more complicated but it helped it sink in with me a little so fingers crossed it can help you too.

    Les
  • KellyG
    KellyG Registered Posts: 51 ? ? ?
    Ok... now I'm confused... I'm struggling with mark ups and margins massively!!! :confused1:
  • artist
    artist Registered Posts: 11 Regular contributor ⭐ ? ⭐
    profit margin is on sales (think sales margin)
    so if sales is given 25% is profit margin

    sales X 25% = gross profit

    sales - cost of sales = gross profit
    (100%) (75%of sales) (25%of sales)


    now sales - gross profit = cost of sales


    If it is mark up it is on cost of sales
    so if sales is given 20% mark up


    sales - cost of sales = gross profit
    (120%) (100% ) (20%)


    sales - gross profit = cost of sales
  • sid
    sid Registered Posts: 7 Regular contributor ⭐ ? ⭐
    thanks, this helps, have a similar equation, but you've thrown a different light on it . every little helps
  • kazseera
    kazseera Registered Posts: 87 ? ? ?
    sid what did your tutor give u to help u ?
  • sid
    sid Registered Posts: 7 Regular contributor ⭐ ? ⭐
    margin

    sales 100%
    cos 75%
    profit 25%

    markup

    sales 125%
    cos 100%
    profit 25%


    so dependant on which given sales or cost of sales work backwards/forwards.
    obviously percentages may change to whatever margin/markup percentage you're given.
    but to remember that sales minus cost of sales equals gross profit.
    Sorry for the late reply been studying til my head exploding. lacking confidence after ECR exam...:tongue_smilie:
  • Darren Pearce
    Darren Pearce Registered Posts: 10 Regular contributor ⭐ ? ⭐
    Don't worry I don't reckon it will be in there :laugh:
  • kathleen bailey
    kathleen bailey Registered Posts: 3 New contributor ?
    I have a great way of remembering mark up & margin
    Marg likes to shop in the sales, Mark thinks it cost to much,
    Marg relates to sales, Mark relates to cost of goods, this sentance will help you remember.
    You know then that Mark up is more, SALES 1256 140%
    COGS 100%
    GROSS PROFIT 40%
    On this example Mark up is 40%, because Mark up relates to Cost i put 100% next to cost, Mark spends more in the sales so 140% goes next to Sales. You then divide 1256 by 140% then multiply by what you are looking for Ie 40%.
    Hope this makes sense, it works every time for me. Do the same with margin
  • Sean of Kent
    Sean of Kent Registered Posts: 3 New contributor ?
    How I do it....

    From June 2007 FRA.

    One model of photocopier the partnership sells is the ZX70. The partnership buys it for £900 excluding VAT.

    What would the selling price be, excluding VAT, if a 40% mark-up was applied?

    £900 x 140% = £1260

    What would the selling price be, excluding VAT, if the sales margin was 40%?

    £900/60% = £1500

    So, for mark-up multiply by (100% plus the given %age) and for margin divide by (100% minus the %age given).

    Hope this helps. Sean :)
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