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# How to work out gross profit margin & gross profit mark up figures?

geek84
Trusted RegularMAAT Posts:

**567**
Hi Folks

I am on level 3 at the moment & having difficulty working out gross profit mark up & margin figures. I basically know the formulas but very often there are other bits of information that you need to work out before working out the margin or mark up figures.

Could someone be kind enough to explain to me how these figures are worked out if only a limited amount of information is given.

Thanks in advance for your response.

I am on level 3 at the moment & having difficulty working out gross profit mark up & margin figures. I basically know the formulas but very often there are other bits of information that you need to work out before working out the margin or mark up figures.

Could someone be kind enough to explain to me how these figures are worked out if only a limited amount of information is given.

Thanks in advance for your response.

0

## Comments

469Markup = (Profit / cost price) x 100

Profit Margin = (Profit / selling price) x 100

So if we are told that Margin is 20% and cost price is £40 and Profit is £10 we can work out what the selling price is by using mathematical equations, when we move a figure to the otherside we do the opposite calculation so a mulitply becomes a divide a minus become a plus etc

Profit = selling Price - Cost price

so 10 = S-40

So moving the -40 to the other side we get

10+40 = S

So selling price is £50

To do the calculation to be sure

we have

Profit Margin = (Profit / selling price) x 100

So

(10/50)*100 = 20%

We can also work out the Markup as we have the right figures

Markup = (Profit / cost price) x 100

(10/40)*100 = 25%

567Many thanks for your reply. However, some of the questions I am doing require finding values for cost of sales goods and gross profit.

Can you be kind enough to give me an example including these?

Thanks in advance.

469you did only mention margin and markup

Could you give me an example of what it is you would be provided with in order to find Cost of Sales and Gross Profit, then I can use it as an example to show you

thanks

K

1,954Cost 70

Profit 30

Total 100

(margin relates to % of profit on "Total" selling price)

and

Mark up 30%

Cost 100

Profit 30

Total 130

(mark up relates to % profit on cost)

If you can get your head around the relationship between the amounts above, you can answer all questions that relate to margin and mark up

1,954567I've done it now.