stuck on FP practice exam 2

topcat
topcat Registered Posts: 452
in AAT Level 4 (Level 8 in Scotland)
Evening all!

How do you get the answer in this question please ?

I can only get £60 by doing £50 * 120%

DkFmn.jpg

Comments

  • Lucy_M
    Lucy_M Registered Posts: 136 Beyond epic contributor 🧙‍♂️
    Hi,
    I can't remember the exact calculation but I'd do this by dividing 100 by the percentage margin needed, ie 20, so 5 of course ;) then thinking that the 50 is only 4 of the 5 needed so I divide the 50 by 4 and add that amount on. That's written so badly but basically margin is a percentage of the total sales price (£62.50 * 20% = the 12.50 which was the amount added to the cost of £50) whereas mark-up is 20% of the cost price as you have done. Clear as mud? Hope it helps a bit!
    Lucy

    Ah, try the calculation for working out tax paid and gross on savings! So 50*100/80 If it was a 35% margin it would be 50*100/65 yeah?! Good luck x
  • topcat
    topcat Registered Posts: 452
    Lucy_M wrote: »
    Hi,
    I can't remember the exact calculation but I'd do this by dividing 100 by the percentage margin needed, ie 20, so 5 of course ;) then thinking that the 50 is only 4 of the 5 needed so I divide the 50 by 4 and add that amount on. That's written so badly but basically margin is a percentage of the total sales price (£62.50 * 20% = the 12.50 which was the amount added to the cost of £50) whereas mark-up is 20% of the cost price as you have done. Clear as mud? Hope it helps a bit!
    Lucy

    Ah, try the calculation for working out tax paid and gross on savings! So 50*100/80 If it was a 35% margin it would be 50*100/65 yeah?! Good luck x

    Hi Lucy and welcome :001_smile:

    Thanks for that much appreciated.

    Do you have any ideas on the difference between "profit margin" and "mark up"?

    XwezA.jpg

    thanks again
  • Lucy_M
    Lucy_M Registered Posts: 136 Beyond epic contributor 🧙‍♂️
    Your welcome, yes, no problem, mark-up is basically adding the percentage of profit on to the cost price but margin is the percentage of the total price that is profit. So with your first example, for mark-up of 20% add 20% but for a margin of 20% the total price divided by 20% gives £50 cost. So with the 2nd example, for the margin, the sales price would be £80 x 100/70 =£114 (rounded). If you take 30% off £114 it gives £80 (roughly). Mark-up of 30% on cost would only be £104, £80 x 30%. Does that help? Hope so! x
  • topcat
    topcat Registered Posts: 452
    Lucy_M wrote: »
    Your welcome, yes, no problem, mark-up is basically adding the percentage of profit on to the cost price but margin is the percentage of the total price that is profit. So with your first example, for mark-up of 20% add 20% but for a margin of 20% the total price divided by 20% gives £50 cost. So with the 2nd example, for the margin, the sales price would be £80 x 100/70 =£114 (rounded). If you take 30% off £114 it gives £80 (roughly). Mark-up of 30% on cost would only be £104, £80 x 30%. Does that help? Hope so! x

    Thanks, this helped a lot :thumbup1:

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