Mark up and margin in consolidated financial statements

I was preparing a consolidated statement of financial position and when I was trying to find the unrealised profit I ran into a problem

This is the information relevant
Premier(parent) had $2 million (at cost to Premier) of inventory that had been supplied in the post-acquisition period by Sanford as at 30 September 2020. Samford made a markup on cost of 25% on sales

So in order to find the profit on inventory I thought we needed to use markup and not convert the markup into margin since the inventory is stated to be given at cost “$2 million (at cost to Premier) ”

Therefore I just took 2 000 000 *25/100=500 000

However the correct answer had converted the markup into a margin instead and did
2 000 0000 *25/125= 400 0000

Could you explain what actually went wrong there because I thought since the inventory is given at cost there is no need to convert the markup into a margin since markup can directly be applied at cost to find the profit