fra exam
sid
Registered Posts: 7 New 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.
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:confused1::confused1::confused1:
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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 sevenup. 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.
Les0 
Ok... now I'm confused... I'm struggling with mark ups and margins massively!!! :confused1:0

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 sales0 
thanks, this helps, have a similar equation, but you've thrown a different light on it . every little helps0

sid what did your tutor give u to help u ?0

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:0 
Don't worry I don't reckon it will be in there :laugh:0

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 margin0 
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% markup 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 markup multiply by (100% plus the given %age) and for margin divide by (100% minus the %age given).
Hope this helps. Sean0
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