MarkT wrote: » Ok - with your mark up - your cost of goods is always 100% and with the margin, the sales figure is always 100%.
Louise89 wrote: » The only thing I would add is... Mark Up (i.e. you mark up your sales higher than 100%) Sales 125% Cost of Sales 100% Gross Profit 25% Margin (Margin inside 100%) Sales 100% Cost of Sales 75% Gross Profit 25% Thats how I remember it.
Haysah wrote: » This is how I remember it to :001_smile:
PGM wrote: » Although in your mark up example, gross profit ends up being 20% (25/125)
Louise89 wrote: » You've confudled me now PGM!! Without looking at my notes I'm pretty sure its 125% - 100% - 25% as the profit is sales less cost of sales... 125-100=25 ?
Louise89 wrote: » So thats correct now?
PGM wrote: » Yeah, I knew what you meant before though Its a horrible subject. And you never get away from it, when someone tells me to charge 30%, I hate to ask the question mark up or margin..?
Louise89 wrote: » OH! PGM! Why did you let me make a fool of myself!
PGM wrote: » I'm sorry Louise but the best way to learn mark up and margin is public humiliation! Accountancy courses are too soft these days
MarkT wrote: » I've been watching this cat and mouse game for a few days now... I'm afraid to ask if my post at the top is right now, but I guess it wouldn't hurt if you could let me know
PGM wrote: » I'm sorry Louise but the best way to learn mark up and margin is public humiliation!
MarkT wrote: » Ok - with your mark up - your cost of goods is always 100% and with the margin, the sales figure is always 100%. So, lets take 3 figuresMark up cost of sales 100% £1680 Profit + 25% £420 Sales = 125% £2100 These same figures but in a different manner:Margin cost of sales 80% £1680 Profit 20% £420 Sales = 100% £2100 all you need to remember is to multiply for a mark up and divide for margin Hope this helps
Louise89 wrote: » What can I say Mark, I've been schooled/accounted! Best ask PGM, he is top dog.
PGM wrote: » I get the same amounts. Yes, I specialised in mark up and margin
Comments
So, lets take 3 figures
Mark up
cost of sales 100% £1680
Profit + 25% £420
Sales = 125% £2100
These same figures but in a different manner:
Margin
cost of sales 80% £1680
Profit 20% £420
Sales = 100% £2100
all you need to remember is to multiply for a mark up and divide for margin
Hope this helps
The only thing I would add is...
Mark Up (i.e. you mark up your sales higher than 100%)
Sales 125%
Cost of Sales 100%
Gross Profit 25%
Margin (Margin inside 100%)
Sales 100%
Cost of Sales 75%
Gross Profit 25%
Thats how I remember it.
This is how I remember it to :001_smile:
The Learning zone on the AAT website has a fantastic section on markup and margin. I really had to think about it in class but when i went through the learning zone section once it clicked straightaway.
I'd definitely recommend it!
That's how I remember it too!
Although in your mark up example, gross profit ends up being 20% (25/125)
You've confudled me now PGM!!
Without looking at my notes I'm pretty sure its 125% - 100% - 25% as the profit is sales less cost of sales...
125-100=25 ?
So you've bought your hat for £100, added 25% mark up, selling price £125.
Then when you work out your gross margin % (gross profit / revenue)
£25 / £125 = 20% gross profit.
You make more profit using the same % of margin compared to mark up.
Mark Up
Sales 125%
Cost of Sales 100%
Gross Profit 25% <<< I meant this to be Mark Up % , then the Gross profit would be as you quite rightly said 20%
So;
Mark Up (i.e. you mark up your sales higher than 100%)
Sales 125%
Cost of Sales 100%
Mark up 25%
Profit 20%
So thats correct now?
Yeah, I knew what you meant before though
Its a horrible subject. And you never get away from it, when someone tells me to charge 30%, I hate to ask the question mark up or margin..?
OH! PGM! Why did you let me make a fool of myself!
I agree... I hope they don't come up too much.
I'm sorry Louise but the best way to learn mark up and margin is public humiliation!
Accountancy courses are too soft these days
I've been watching this cat and mouse game for a few days now...
I'm afraid to ask if my post at the top is right now, but I guess it wouldn't hurt if you could let me know
What can I say Mark, I've been schooled/accounted! Best ask PGM, he is top dog.
Don't worry, I'll never get it wrong again!
I get the same amounts.
Yes, I specialised in mark up and margin
I feel much happier now