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

Finacial stament, Ask question #Minimum 10010 qestions words accepted#

Ask question #Minimum 10010 qestions words accepted#

Determine the total production requirement for the month, A Company policy ...

A Company policy calls for keeping safety-stock equal to 25% the forecasted demand for that month.  The company currently has a work force of 12 people.  It takes a worker 3 hours

Deferred tax-income tax-financial statement, Deferred tax A company may e...

Deferred tax A company may enter into transactions in the current financial period that may result in the firm either paying or saving some tax in the future. The tax that may be

Calculate interest rate , As a borrower, which of the following two 30 year...

As a borrower, which of the following two 30 year, monthly payment loans would you choose (and why) if you had a 10 year expected payment horizon: 5% interest rate with 3.5 points,

Ias1 contents of financial statements, IAS 1 contents of financial statemen...

IAS 1 contents of financial statements IAS 1 prescribes the contents of published financial statements. The major reports that are included as part of the published financial sta

Annual coupon payment, Arnot International's bonds have a present market pr...

Arnot International's bonds have a present market price of $1,250. The bonds have an 11% annual coupon payment, a $1,000 face value, and 10 years left until maturity. The bonds may

What is amortization, Q. What is Amortization? Amortization -Periodic a...

Q. What is Amortization? Amortization -Periodic and Gradual reduction of any amount, like the periodic write-down ofa BOND premium, cost of an intangible ASSET or periodic paym

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