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Sir I was following your examples on markup and margin before I got confused. My qtn is: is this the profroma for working out markup and margin?
Markup -% of cost- if cost is 20000 and markup 20% find sales
Cost : 20000
Profit : 4000
————
Sales. 24000
Here it shows that cost + profit=sales2. Karen has sales of $50000 and applies a markup of 25% find cost of goods sold. so we use the proforma again;
Cost: ×
Profit:0.25x
———-
1.25x=50000.we divide to get 40000
IT shows here sir that u still added here which I understand.
Now on margin which is a % of sp:
Peter has sales of 120000.his profit margin is20% find cost of goods?
Sales. 120000
Margin 20% of120000
———‘
96000
———–
Please sir why did u deduct? Cos it means that Sales-Margin=cost
B) Paul has cost of goods of45000. Gross profit margin of 25%,find sales,
Sales:X
Margin:0.25X. why did u deduct here sir and not add?
———-
0.75X =45000
X=60000
In a nutshell do u add in in markup and subtract in margin or what?The mark-up and margin both give us the profit (as you have written, the mark up is the profit as a % of cost, whereas the margin is the profit as a % of sales).
In all cases the profit is the sales less the cost of sales.
So if you are asked for the cost of sales, it is the sales less the profit.
If you are asked for the sales, then it is the cost of sales plus the profit.Have you watched the free lectures that go with the lecture notes?
(It is pointless to use the notes without watching the lectures, because they are only lecture notes. I work through the examples in the lectures and explain and expand on the notes. If you are not watching the lectures for any reason then you need to buy a Study Text from one of the ACCA approved publishers and study from there.)Thanks sir. Thats the formula i needed. I do read the notes and then watch the lectures afterwards for clarity.
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