# margins!!

Registered Posts: 5 Regular contributor ⭐ ? ⭐
Just doing the december 07 test in prep for wednesday FRA. question 1.6 has got me - just can't get my head round margin & mark up, got a mental block there.

question is: 'closing stock valued at selling price at £22,750 excl vat. Mark up on goods is 40%, calculate closing stock figure?'

Can anyone elaborate for me please??

• Registered Posts: 5 Regular contributor ⭐ ? ⭐
I mean december 05
• Registered Posts: 40 ? ? ?
Hi,

It is a shortened version of:

22750/140 (100%+40% mark up)=162.5 (1%)
162.5*100= 16250 (100%)

In this way you know it cost you £16250

And to double check

16250*40%=6500
6500+16250=22750

Hope that helps, as my explainations are pretty rubbish (they work in my head!):001_unsure:

H.
• Banned User Posts: 93 ? ? ?
Everyones got a different way of working these things. I'll show you the method I use:

Gross Profit Mark Up = Gross Profit/Cost of Sales x 100

= (Sales - Cost of Sales)/Cost of Sales x 100

so

(22750-c)/c x 100 = 40 where c is cost of sales
(22750-c)/c = 40/100 = 0.4
22750-c = 0.4c
22750 = c + 0.4c = 1.4c

so c = 22750/1.4 = £16250 which is the closing stock figure at cost price.
• Registered Posts: 3 New contributor ?
I have just replied about this question at 2.31 to sanju, take a look, hope it helps
• Registered Posts: 5 Regular contributor ⭐ ? ⭐
thanks for your help! think its sinking in..tomorrow will be the test!! good luck to eveyone doing FRA tomorrow!!!!!!!! :scared: