MARK UP

- The difference between the cost of the item and its selling price.
- Most businesses use this method to set prices that covers and generate profit.
- usually expressed in terms of percent.

Basic formulas:
Selling price = Mark-up + Cost
Mark-up = Selling price - Cost
Cost = Selling price - Mark-up

Mark-up based on cost:

Mark-up = Rate × Cost

Rate = Mark-up ÷ Cost
Cost = Mark-up ÷ Rate

Mark-up based on selling price:

Mark-up = Rate × Selling price

Rate = Mark-up ÷ Selling price
Selling price = Mark-up ÷ Rate

Ex: Determining mark-up using the basic formula:

1. An office table with a total cost of P2,230 is sold for P2,900. What is the of mark-up?
Given: S= 2,900 C= 2,230
MU= S - C
= 2,900 - 2,230
= P670

Ex: Determining the mark-up by its cost:

1. Find the mark-up and selling price that costs P24 of there is a 35% markup on cost.

Given: Rate = 35% or 0.35

Cost = 24

MU = R × C
= 0.35 × 24
= P8.40

SP = C + M
= 24 + 8.40
 = 32.40

Selling price = 32.40

Cost = 24
Mark-up = 8.40

Ex: Determining the mark-up by its selling price:

1. A sandals sells for P150. If there is 30% mark-up on the selling price, find the cost and
the amount of mark-up.
Given: Rate = 30% or 0.30
Selling price = 150

MU = R × S
= 0.30 × 150
= P45

Cost = S - M
= 150 - 45
= 105

Selling price = P150

Cost = P105
Mark-up = 45

Mark-up can be state in 2 ways, rate based on cost:

Mark-up = Rate × Cost
Rate = Mark-up ÷ Cost
Cost = Mark-up ÷ Rate

and rate based on selling price:

Mark-up = Rate × Selling price
Rate = Mark-up ÷ Selling price
Selling price = Mark-up ÷ Rate

but most of the time mark-up is determined based on the selling price because it's more
convenient than cost. Also discounts and sales commission are all based on the selling price of
the product.