Question about Markup

westendlad

I'm doing the December 2005 paper in preparation for the unit 5 exam next week.

There is a question :

On October 2005, closing stock was valued at selling price of £22,750 excluding VAT.

The markup on these goods is 40%.

The answer is :

£22,750 / 1.4 = £16,250

How do you do this ? What does 1.4 mean ?

katsutlieff

The goods are priced at £22,750 this includes the 40% mark up.
So to take away the 40% you will do the equation 22750/1.4 = £16,250

Alternatively the price before mark up is £16,250 to which you want to add 40%
£16,250*1.4= Selling price £22,750

/1.4 is the equation for taking off 40%

Hope this helps and good luck for next week!!

westendlad

thanks, I'll need it :thumbup1: