Page 76 - MAC4861_2 Costing class slides part 2

DECISION MAKING

Mark up vs. Margin

Mark up - This is the profit % on cost.

Example: The cost of product A is R600. Calculate the selling price if the mark up is 25%
on cost.

COST 100%

MU 25%
SP 125%

R600 x 125%/100% = R750

Margin - This is the profit % on sales.

Example: The cost of product A is R600. Calculate the selling price if the margin is 25%
on sales.

SP 100%

MARGIN (25%)

COST 75%

R600x 100%/75% = R800
76