Mark-up and margin

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Please can anyone help me. I just do not get this concept. <BR><BR>When we have incomplete records and are given the mark-up percentage or gross profit margin to calculate either closing stock or purchases, etc what is the best way to remember what to do. <BR><BR>Does anyone out there have any tips or good methods of explaining this.<BR><BR>Please - this is really doing my head in. No matter how many times my tutor explains it or how many times I read the text book I still don't understand it.<BR><BR>Any help would be GREATLY appreciated.<BR><BR>Thanks

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    Mark-up and margin

    Hi<BR><BR>here are some links to help you.<BR><a target=new class=ftalternatingbarlinklarge href="http://bized.ac.uk/learn/accounting/financial/nonprofit/losses.htm">http://bized.ac.uk/learn/accounting/financial/nonprofit/losses.htm</a><BR><BR><a target=new class=ftalternatingbarlinklarge href="http://www.pem.co.uk/common/calculators/gross_profit_margin.html ">http://www.pem.co.uk/common/calculators/gross_profit_margin.html</a><BR><BR>Basically (i'm sure this is correct)<BR><BR>Mark up is cost of goods x Mark up %= Selling price or (sales)<BR>Gross Margin is selling price (sales) x Margin %= profit<BR>to obtain cost of goods sold deduct profit from selling price or (sales)<BR><BR><u>Mark-up</u><BR><BR>Company A sells Widgets at a cost of £1 each, they have a 30% mark-up. What would be the selling price<BR>£1.00 + 30%= £1.30.<BR>To do this with total stock sold it works the same way (100,000 widgets)<BR>£100000 +30%= £130,000 worth of Sales<BR><BR><u>Gross Profit Margin</u><BR><BR>A company sells Zilos for £10 each, what is the profit if they have a margin of 30%<BR>£10 x30%= £3 gross profit- <BR>£10-£3 = £7 cost of sales (stock value sold)<BR><BR>To do this for total sales (100,000 Zilos)<BR>£1,000,000 x30%= £300,000 gross profit<BR>£1,000,000 - £300,000= £700,000 cost of sales (stock value sold)<BR><BR>Good Luck<BR>Claire<BR><BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Mark-up and margin

    Thank you. That helps a little.<BR>Those links are really useful.<BR>Thanks.

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