18. Mark-up and Margins

Question 1

What is a mark-up?

Answer 1

The gross profit expressed as a percentage of the cost.

E.g:
- Cost of goods sold = £20,000
- Mark-up = 20%
- Therefore sales = £24,000

Question 2

What is a gross profit margin?

Answer 2

The gross profit expressed as a percentage of the selling price.

E.g:
- Sales = £120,000
- Gross profit margin = 20%
- Therefore, cost of goods sold = £96,000