Page 251 - F3 -FA Integrated Workbook STUDENT 2018-19

Incomplete records

Gross profit mark-up and margin

3.1 Mark-up

Mark-up expresses profit as a percentage of cost, e.g. a mark-up of 25% means that
profit is 25% of the cost figure. In a 25% mark-up situation the following cost structure
would apply:
$ %

Sales 750 125

Cost of sales 600 100
Gross profit 150 25

3.2 Margin

Margin expresses profit as a percentage of selling price e.g. margin of 25% means
that 25% of the selling price is profit. In a 25% margin situation the following cost
structure would apply:

$ %

Sales 800 100
Cost of sales 600 75

Gross profit 200 25

Illustrations and further practice

Now try questions TYU 8 and TYU 9 from Chapter 18 of the Study Text.

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