Cost Price, Sales Price, Mark-Up

Q: How do you find the cost price if the sales are $216,000 and the mark-up is 50%?


A:
"Mark-up" literally means the amount you "mark up" the cost by (the amount you increase it by) to get to the selling price. The percentage (50%) is based on the cost - i.e. the profit (mark-up) is 50% of the cost price.

Cost Price Sales PriceIn an equation this simplifies to:

Mark-up (profit) / cost = 50/100 (50% of cost)

Selling price = cost + profit (mark-up)
Selling price = 100%+50%
Selling price = 150%

Therefore cost = 100/150 X $216,000 = $144,000

Hope that helps understand the differences between cost price, sales price and mark-up.

Best,

Comments for Cost Price, Sales Price, Mark-Up

Click here to add your own comments

Loss
by: EmoLover

If an article is sold at a loss of 25% and was bought for $1250, find the cost price.

Inventory
by: Hassan

Opening stock = 39,700.00
Purchases = 453,000.00
Sales = 551,000.00
Closing balance= ?????????
if markup 30%


To solve this problem you have to know the cost of sales formula and what mark-up percentage means. You may want to check out my lesson on Sales, Cost of Goods Sold and Gross Profit before continuing here.

The cost of goods sold formula:
Cost of Goods Sold = Opening Inventory + Purchases - Closing Inventory

Closing Inventory formula:
Closing Inventory = Opening Inventory + Purchases - Cost of Goods Sold

Closing Inventory = 39,700.00 + 453,000.00 - Cost of Goods Sold


But they don't give us cost of goods sold, only the sales.

So we use the sales figure and mark-up to get the cost of goods sold.

Cost of Goods Sold = 100/130 X Sales
= 100/130 X 551,000.00
= 423,846

Closing Inventory = 39,700.00 + 453,000.00 - Cost of Goods Sold

Closing Inventory = 39,700.00 + 453,000.00 - 423,846
= 68,854


Hope that helps understand mark-up, cost of good sold and closing inventory!

Best,

Click here to add your own comments

Return to Ask a Question About This Lesson!.






Enjoying this Website?
Help Support it with a Donation

OR...





Advertise on ventoup.ru

privacy policy




Related pages


accounting entries for depreciationvat equationhow to calculate finished goods inventorybad debt expense entryperiodic inventory by three methodsbad debts entriesdebit accounting definitiondepreciation journal entry exampleexample p&l and balance sheetdrawings meaning in accountingcost of goods manufactured equationmarkup percentage equationwhat is sundry in accountingcash withdrawal from bank entry in tallydebit credit accounting chartdetermine markup percentageretained earning accountdefine creditor in accountingformat of cash flow statement direct methodaccounting technician sample test questionshow to prepare statement of stockholders equitywhat is trial balance & why it is prepareddifference between debit and credit accountingdefine equitiesaccounting equation islynn shackelfordmarkup accounting formulawyzant tutoring addressbalance sheet exercises with answersvertical meaning in tamilnon perpetual inventorycommon bookkeeping entriescreditor meaning in accountingcash discount in accountingscrapping goldclaim receivable on balance sheetsundry creditor definitiondebtor reconciliation statementhow to compute gross profit marginnormal balance of expensewages debit or creditdefinition of profit motivedebit and credit entries in trial balancenet sales equals revenueowners equity meanslifo methodslifo accounting exampletagalog of oweexcel income statement templatefifo cogshow to calculate fifo in accountingdebit and credit accounting explainedsundry meanssample deposit slipsgrade 11 accounting textbook pdfbooks for accounting studentswhat is ledger folio numberwhat is income and expenditure accountsundry meaning in accountinghow to compute markupsimple balance sheet template excelhow to calculate fifobusiness owner synonymvat calculation in excelproduction report managerial accountingaccounting principles quizsofp accountingdefine accrual basis accountingdebit credit journal entry exampleska abbreviationtrial balance of balancesmeaning of debit and credit in accounting termsgross profit computationclosing entries in accountingwhat is direct and indirect expenses in accountingexample of tally entry