Mark up-branches, Financial Accounting

Mark up

Mark up is defined as the rate of gross profit to cost of sales:

Mark up = Gross Profit

              Cost of sales

Margin is defined as the rate of gross profit to sales:

Margin = Gross profit
                     Sales

Calculations of markup and margin are necessary to compute the profit loading on:

  • Closing stock at the branch
  • Returns from branch to head office

 

Examination questions may provide information on either the markup or the margin. If one is provided, it may be necessary to compute the other.

Let us assume:   X    =    Gross Profit
                         Y    =    Sales

Therefore:  Margin = Gross Profit    = X
                                  Sales            Y

However:  Sales – Costs = Gross Profit

Or: Costs = Sales – Gross Profit

Which is stated as: Costs = Y – X

And since: Mark up = Gross Profit
                                 Costs

This is stated as: Mark up =  X
                                       Y – X

In summary, if: Margin = P/Q

Then the related Markup shall be P/(Q – P)   

Using similar arguments, it can be established tat if the Markup is give by P/Q,

Then the related margin shall be P/(Q+P)

Posted Date: 12/12/2012 1:25:24 AM | Location : United States







Related Discussions:- Mark up-branches, Assignment Help, Ask Question on Mark up-branches, Get Answer, Expert's Help, Mark up-branches Discussions

Write discussion on Mark up-branches
Your posts are moderated
Related Questions
1 The entry establishing a $175 petty cash fund would include a: a) debit to cash for $175 b) credit to Petty cash for $175 c) debit to petty cash for $175 d) debit to miscellaneou

I see a question posted. I can I be sure the problem has been solved. I tried calling your number but I got no answer

Zoum Corporation had the following transactions during 2014: 1. Issued $125,000 of par value common stock for cash. 2. Recorded and paid wages expense of $60,000. 3. Acquired land


In the current year, Madison Corporation had $50,000 of taxable income at a tax rate of 25%. During the year, Madison began offering warranties on its products and has a warranty l

Can you do the attached quections by Monday?

Heathrow issues $2,000,000 of 6%, 15-year bonds dated January 1, 2011, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $1,728,224.

Dividends During the year, the company paid a dividend of Sh.2 per share on the ordinary share s outstanding and Sh.1 on the preference shares outstanding. The company is now pr

QUESTION 1: Part A Malcolm was in business as an import merchant and the following balances were extracted from his books on 31st December 2003: Purchases

The current stock price of IOU is $250 and has a standard deviation of 35% per year. The risk-free interest rate is 5% per year compounded continuously. Find the prices of a call a