margin and mark up

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Primble
Primble Registered Posts: 729 Epic contributor 🐘
in AAT Level 3 (Level 6 in Scotland)
if I have to work out sales with 40% mark up for part a and a 40% margin for part b. how are these different and worked out? The example I looked at wasn't very good

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  • Richard
    Richard Registered Posts: 368 Dedicated contributor 🦉
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    Mark up is the percentage that you increase the cost price by, so if you purchased an item for £100 the markup would be £40 as this is 40% of £100. Total selling price would be £140.

    If you were to apply a margin of 40% to the £100 item, £100 would represent 60% of the total cost (100 - 40) so, £100/60 x 100 would give you the selling price of £166.67 with £66.67 being the margin.
  • visha
    visha Registered Posts: 218 Dedicated contributor 🦉
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    See the attached document

    Attachment not found.
  • ambitious
    ambitious Banned User Posts: 92 Regular contributor ⭐
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    Gross Profit Margin = --Gross Profit---x 100
    Sales

    Gross Profit Mark up = --Gross Profit---x 100
    Cost of Sales

    NET Sales - Cost of Sales = Gross Profit

    Cost of Sales = Opening Stock + NET Purchases - Closing Stock

    Use these formulae and you'll have no problems. If your algebra was good at GCSE level then you should be able to rearrange these formulae to find whatever is missing. This method works for me.

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