Question about Markup

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westendlad
westendlad Registered Posts: 30 Regular contributor ⭐
in AAT Level 3 (Level 6 in Scotland)
I'm doing the December 2005 paper in preparation for the unit 5 exam next week.

There is a question :

On October 2005, closing stock was valued at selling price of £22,750 excluding VAT.

The markup on these goods is 40%.

The answer is :

£22,750 / 1.4 = £16,250

How do you do this ? What does 1.4 mean ?

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  • katsutlieff
    katsutlieff Registered Posts: 459 Dedicated contributor 🦉
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    The goods are priced at £22,750 this includes the 40% mark up.
    So to take away the 40% you will do the equation 22750/1.4 = £16,250

    Alternatively the price before mark up is £16,250 to which you want to add 40%
    £16,250*1.4= Selling price £22,750

    /1.4 is the equation for taking off 40%

    Hope this helps and good luck for next week!!
  • westendlad
    westendlad Registered Posts: 30 Regular contributor ⭐
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    thanks, I'll need it :thumbup1:

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