stuck on FP practice exam 2
topcat
Registered Posts: 452
Evening all!
How do you get the answer in this question please ?
I can only get £60 by doing £50 * 120%
How do you get the answer in this question please ?
I can only get £60 by doing £50 * 120%
0
Comments

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 markup 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 x0 
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 markup 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"?
thanks again0 
Your welcome, yes, no problem, markup 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 markup 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). Markup of 30% on cost would only be £104, £80 x 30%. Does that help? Hope so! x0

Your welcome, yes, no problem, markup 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 markup 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). Markup of 30% on cost would only be £104, £80 x 30%. Does that help? Hope so! x
Thanks, this helped a lot :thumbup1:0
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