FRA Margins and Mark up

SANJU
SANJU Registered Posts: 4 New contributor ?
Hi,

I thought I was ok on margins and Mark up but there is question on a past paper as

Task 1.8
Alex Williams has given you a closing stock figure of £24,000 at selling price. There is also a note in last year’s file stating that the sales margin is normally one third.

(a) Use this information to calculate the closing stock figure for inclusion in the final
accounts.


Answers

Task 1.8

(a) £24,000 x 2/3 = £16,000


My question is how do I apply the one third? May be it is very simple but I cannot work it out.

Speedy reply would be helpful as my exam is tomorrow!!!

Thanks

Comments

  • jenz496
    jenz496 Registered Posts: 31 ? ? ?
    sales margin is a profit percentage based on selling price.

    therefore if the margin is one third the stock then the cost price of the stock is 2/3 of the selling price.

    therefore 24,000 x 2/3 = £16,000
  • renae
    renae Registered Posts: 76 ? ? ?
    margins

    I also need help with mark up.
    Test paper Dec 2005, task 1.6, closing stock valued at selling price of £22,750 excluding vat.
    The mark up on these goods is 40%
    Calculate the closing stock figure for inclusion in the tb?
    I have looked at the previous threads & still ban't work it out...HELP
  • jenz496
    jenz496 Registered Posts: 31 ? ? ?
    If the selling price is 22,750 and the markup is 40% then the goods are worth 140%, 100% of the value should be included as closing stock.

    ie. 22,750/140*100 = 16,250
  • Dean89
    Dean89 Registered Posts: 9 Regular contributor ⭐ ? ⭐
    Mark Up

    Sales = 100 + MUP%
    Cost Of Sales = 100%
    GP = MUP%




    the mark up is 40%

    so £22750 is 140% of the cost of the stock

    so to work out the cost of the stock

    22750 x 100/140 = 16250
  • renae
    renae Registered Posts: 76 ? ? ?
    I finally get it!!!! thanks :001_smile:
  • SANJU
    SANJU Registered Posts: 4 New contributor ?
    Thanks!

    Thank you guys for the replies.
    Good luck with your exams!
  • kathleen bailey
    kathleen bailey Registered Posts: 3 New contributor ?
    Hi the way i work it out is you know mark up relates to COGS so here is a formula that works every time. SALES 22,750 140%
    COGS 40%
    100%
    write out what you have e.g in this case you have COGS 40%, so you know Sales wil be 140%, then remember divide what you have then x by what you want, e.g 22750/140 then x by 100 = 16250.
    For margin you know it relates to sales so
    SALES 100%
    COGS 40%
    GROSS PROFIT 60%

    My little motto to remember is Marg(margin) likes to shop in the sales you know this will be 100%

    For Mark up, Mark (Mark up) thinks it costs too much you know this will be 100%.
    Hope I havnt confused you, but this really helps me.
  • sexyback
    sexyback Registered Posts: 13 Regular contributor ⭐ ? ⭐
    Help - COGS? what is COGS:confused1:
  • jenz496
    jenz496 Registered Posts: 31 ? ? ?
    cost of goods sold.
  • sexyback
    sexyback Registered Posts: 13 Regular contributor ⭐ ? ⭐
    Ahhh stupid me - my brain hurts:lol:
  • sexyback
    sexyback Registered Posts: 13 Regular contributor ⭐ ? ⭐
    My little motto to remember is Marg(margin) likes to shop in the sales you know this will be 100%

    For Mark up, Mark (Mark up) thinks it costs too much you know this will be 100%.
    Hope I havnt confused you, but this really helps me.


    I too like to make up little motto's but can someone explain this to me??:001_unsure:
  • Muhammad
    Muhammad Registered Posts: 6 Regular contributor ⭐ ? ⭐
    there is a question in december 2005 paper askin for closing stock figure,

    the closing stock was valued at selling price at £22,750 excluding VAT. the mark-up on these goods is 40%
    calculate closing stock figure for inclusion in the the trial balance.

    i have checked da answer and it is £22,750/1.4 = £16,250

    i have no idea how to do dis question.... plz some one help me on this question
  • SANJU
    SANJU Registered Posts: 4 New contributor ?
    Hi see Kathleen, explantions it will help you to understand to do the question.
  • Muhammad
    Muhammad Registered Posts: 6 Regular contributor ⭐ ? ⭐
    thanks snaju, got it
    but not logically i have remembered it 4 2morow

    good luck 4 tommorrow
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