Help needed plzzzz on FRA EXAM?

nabz

Hi all, i'm gettting confused on how to change mark-up to margin...anways heres the Q: FRA Dec 2008 -

Task 1.5 (a) According to SSAP9, stocks should be statedd at the lower of cost and net realisable value.

On 30 Sep 2008, closing stock was recorded at its selling price of £19,800 excluding VAT. The mark-up on the cost of these goods is 65%

a) Calculate the cost of closing stock?

Answer is £19,800/1.65=£12,00 closing stock. But I need to know the formulas of how to convert/change mark-up to margin first? and how did they get the (1.65)

Thanks

AuntieT

Selling price is £19,800

Mark up is 65% therefore the selling price is 165% of cost price so

£19,800 / 165% = Cost price
£19,800/ 1.65 = Cost price
=£12,000

Hope that makes sense