Mark up-branches, Financial Accounting

Assignment Help:

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)


Related Discussions:- Mark up-branches

American institute of certified public accountants, American Institute of C...

American Institute of Certified Public Accountants (AICPA) - National professionalmembership organization which represents practicing CERTIFIED PUBLIC ACCOUNTANTS(CPAs). AICPA esta

What is exposure draft, Q. What is Exposure Draft? Exposure Draft - Doc...

Q. What is Exposure Draft? Exposure Draft - Document issued by AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA), FINANCIAL ACCOUNTING STANDARDS BOARD (FASB), GOVERNME

Assess the liquidity and solvency of the company, Students are to prepare a...

Students are to prepare and report as a financial advisor to an investor as to whether the public company selected is a suitable investment for the investor. In preparing the essay

Ethics and Social Responsibility, Select a publicly traded company for whic...

Select a publicly traded company for which an Accounting and Auditing Enforcement Release (AAER) was published on the U.S. Securities and Exchange Commission (SEC) website at http

Redemption of debt, Q. Redemption of debt? Equity finance is permanent ...

Q. Redemption of debt? Equity finance is permanent capital that doesn't need to be redeemed while debt finance will need to be redeemed at some future date. Redeeming a huge am

Determine the optimum combination of milk and biscuits, 1. Jim buys only mi...

1. Jim buys only milk and biscuits.    (a) In 2004, Jim earns $100, milk costs $2, biscuits cost $4 per dozen. Draw Jim's budget constraint  (b) Now suppose that all prices i

Accounts relate to keenal real estate, Prepare a financial statement from a...

Prepare a financial statement from alphabetic listing of accounts: A number of accounts balances are listed below these accounts relate to Keenal Real Estate. During the year just

Investment property, I want to do research on investment property which res...

I want to do research on investment property which research topics are appropriate

What you did and thinking process, During 2012, Kimmel Co. incurred average...

During 2012, Kimmel Co. incurred average accumulated expenditures of $600,000 during construction of assets that qualified for capitalization of interest. The only debt outstanding

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd