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

Legal delinquency, Omission to do something which a reasonable man, guided ...

Omission to do something which a reasonable man, guided by those ordinary considerations that ordinarily regulate human affairs, would do or doing of something that a reasonable an

Survivorship policy, SURVIVORSHIP POLICY The partners may take out a su...

SURVIVORSHIP POLICY The partners may take out a survivorship policy to safeguard against future cashflow problems incase a partner dies or the business is dissolved. E.g. incas

Illustration of consolidated balance sheet, Illustration of consolidated ba...

Illustration of consolidated balance sheet H Ltd owned S Ltd since the date of incorporation of S Ltd. The balance sheets of the two  companies as at 31 December 20X2 is as fo

Fiscal policy , Fiscal Policy In a democracy, elected officials of the...

Fiscal Policy In a democracy, elected officials of the government create programs for the general welfare of the population. To pay for these programs, the government taxes in

maximize profit, Natural Furniture Company manufactures three outdoor prod...

Natural Furniture Company manufactures three outdoor products, benches, chairs, and tables. Every product must pass by the following departments before it is shipped: sanding, sawi

Calculating future values, Show all support work for your calculations. ...

Show all support work for your calculations. 1.  Simple Interest versus Compound Interest [LO1]  First City Bank pays 7 percent simple interest on its savings account balances,

Retained Earnings and Capital, What happens to capital when a project is co...

What happens to capital when a project is completely funded by retained earnings?

Compute the total of amount of assets, Balance Sheet Classifications and Re...

Balance Sheet Classifications and Relationships: Shelley and Co. has the following balance sheet elements as of December 31, 2012. Land. . . . . . . . . . . . . . . . . . . . . . .

The maturity date of a note receivable, The maturity date of a note receiva...

The maturity date of a note receivable 1. Is the day of the credit sale 2. Is the day the note was signed 3. Is the day the note is due to be paid 4. Is the date of the first payme

What do you mean by inflation, Q. What do you mean by Inflation? Predic...

Q. What do you mean by Inflation? Predicts of future inflation of sales prices and variable costs should be prepared Therefore that a nominal NPV evaluation is able to be under

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