Gross Profit & Mark Ups

Re:Gross Profit & Mark Ups

I must say, Zoe, this is not my strong point, but this is how I remembered it:

Cost price + profit = selling price

If profit is a percentage of cost, this is the mark up.

(Mark costs)

Therefore we can say:

Cost price plus mark up equals Selling price

Or if we know that a unit costs £5 and the mark up is 25%, we can compute that:

£5 x 25% = £1, thus £5 + £1 = £6. The sale price is £6

Profit as a percentage of the selling price is the Profit Margin.

(Marge Sells)

This would be better expressed as:

Sales price less margin equals Cost price.

If we know that a unit sells for £6 and the margin is £1.50 the %age profit margin is:

1.5 divide by 6 x 100 = 25%

Mark up is a ratio of profit to cost

Margin is a ratio of profit to selling price

I did struggle with costing. Hope you do well.

Anne Marie

Re:Gross Profit & Mark Ups

With Mark Up I try to remember MUCOS