Mark up & Margin

kitty

Please can someone help.
I really dont understand these. Please can someone explain.
Thanks:confused1:

mrspnut

Mark up is where you work out the percentage it's asking for and add it on, margin is where you have to find the net figure. It's the same principle as adding vat and finding the net value.

kitty

I know its a pain but do you have an example?
Thanks

rachy1975

kitty wrote: »

Please can someone help.
I really dont understand these. Please can someone explain.
Thanks:confused1:

margin -
sales = 100%
margin of profit + cost = 100%
so the cost and margin = sales

eg sales is £100 and margin is 25%

so sales is 100% (£100)
margin is 25% (£25)
cost is 75% (75%)


Mark up

cost = 100
mark up = whatever %
sales = 100 and whatever %

eg cost is £100 and they are marked up by 40 %

40% of 100 is £40

so selling price is 140 % (£140)
cost is 100% (£100)
mark up is 40% (£40)

mrspnut

Mark up on sales of 30% - sales of 60,000 = 60,000 x (30/100) = 18,000
Total sales revenue = 18,000 + 60,000 - 78,000

Margin of 25% - Sales revenue of £125,000 - sales = (125,000/125) x 100 = 100,000

rachy1975

rachy1975 wrote: »

margin -
sales = 100%
margin of profit + cost = 100%
so the cost and margin = sales

eg sales is £100 and margin is 25%

so sales is 100% (£100)
margin is 25% (£25)
cost is 75% (75%)


Mark up

cost = 100
mark up = whatever %
sales = 100 and whatever %

eg cost is £100 and they are marked up by 40 %

40% of 100 is £40

so selling price is 140 % (£140)
cost is 100% (£100)
mark up is 40% (£40)

someone else confirm this though please as i have done so much revision i have got to that point when im doubtiing myself.....lol :huh:

kitty

Thank you so so so much for that.
I get it now. How daft am I lol.
Just have to remember it now.
Thanks again.:thumbup:

HayleyM

I am also stuck on this!!

Can someone confirm the below please?

Cost price x mark up % = mark up value
Selling price x Margin % - Margin Value.

Markup/margin - calculation of sales
1) Work out gross profit = Cost of sales x mark up %
2) Work out the sales = Cost of sales + Gross profit

Mark up/Margin - Calculation of purchases
1) Work out gross profit = sales x margin %
2) Work out cost of sales = Sales - gross profit
3) Work out purchases = Cost of sales + closing stock - opening stock.

Mark up is % of sales
Margin is % on cost

This is basically what I have written down in my revision notes. But I don't feel very confident about it. I might feel abit better if someone confirms this is right..... :001_unsure:

This seems to be the hardest part of FRA for me, seriously hoping it's not in the exam this year :crying:

Ta

richprice

Mark up & Margin

Hi All

OK, lets keep it very simple. There is 2 options.

1) Mark up on cost of sales
2) Profit Margin

Tip, If you remember the bit in red above the rest falls into place.
Explanation:
1)
Cost of sales =100%
+ profit =(eg 20%)
Sales revenue = 120%

2) It has to be different to the one above, therefore.

Sales revenue = 100%
Cost of sales =(eg 20%)
Profit = 80%


Summary, So 'mark up on cost of sales' has cost of sales as 100% the other is the opposite. Hope this helps.

All the best everyone.

katsutlieff

THANK YOU Rachy1975, I now finally get this :thumbup:

Good luck everyone for tomorrow, anyone else taking FRA at LondonSam?