Can you explain to me what mark up and margin are?

mighty18mighty18 AAT Student Posts: 5
I came across whilst studying prepare final accounts for sole traders and partnerships: mark up and margin as a method of finding incomplete records as well as, trading account can also, be used.

Answers

  • mighty18mighty18 AAT Student Posts: 5
    I do not know, how to calculate mark up and margin.
  • liblob89liblob89 Registered Posts: 5
    They are each to do with how much a product costs and it's selling price.

    With mark up - the cost is 100% of the price, and the mark up goes on top of this. So if for example your product costs £100 and you want to make 30% profit, your mark up would be £30. As your cost is 100% and you want to make an additional 30% on top of this.

    With margin - the selling price acts as 100%. So if you have a product that is sold for £130, and your margin is 30%, your cost price is £91. To break this down - £130 is 100%, your cost price is 70% of this (your remaining 30% is your profit) meaning that your cost price is £91.

    hope this makes sense? You might want to have a look at this link also.

    https://www.aatcomment.org.uk/margins-and-mark-ups/

    Libby.
    Norvydas
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