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 Price In 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 you understand the differences between cost price, sales price and mark-up.

Check out the comments below for more questions about this topic.

Related tutorials: - Michael Celender
Founder of Accounting Basics for Students


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Comments for Cost Price, Sales Price, Mark-Up

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Mark-up of 120%
by: Anonymous

If I have a selling price of $25 and a mark up of 120%, what would the cost price be?

As mentioned, when we're dealing with "mark-up" we're using the cost price as our base - so the cost price is the 100% and the mark-up is based on this.

What makes this particular question pretty tricky is that the mark-up, meaning the increase from cost price to selling price, is very high - above 100%. Usually the mark-up is below 100% - for example, 20% or 30%.

The mark-up of 120% means the increase to get the selling price is equal to 120/100 of the cost. In other words, the increase ("mark-up") is even greater than the cost itself!

The selling price is equal to the cost price plus the mark-up. In this example, the selling price is 100% + 120% = 220% of the cost price.

Cost price = 100/220 x selling price
= 100/220 x $25
= $11.36

So the cost was $11.36, the increase (mark-up) was $13.64, bringing our selling price to $25.

Hope that has helped simplify things a bit!

Best,
Michael Celender
Founder of accounting-basics-for-students.com

Confused
by: Anonymous

My selling price is $168.75 and the mark up is 25% so what is my cost?

Remember that when we're dealing with "mark-up," this means we're using the cost as our base and the cost price is thus 100%. The mark-up of 25% means the increase to get the selling price is equal to 25/100 of the cost or 25%.

The selling price is equal to the cost price plus the mark-up. In this example, the selling price is 100% + 25% = 125% of the cost.

Cost price = 100/125 x selling price
= 100/125 x $168.75
= $135

Best,
Michael Celender
Founder of accounting-basics-for-students.com

Mark-Up Question: Calculate the Cost Price and Selling Price
by: Anonymous

If I have a profit of R700 and a mark-up on cost of 50%. What is the cost price and the selling price?

Mark-up percentage = Profit / Cost Price

Switching this formula around:

Cost Price = Profit / Mark-up percentage
= R700 / 0.50
= R1,400

Selling Price = Cost Price + Profit
= R1,400 + R700
= R2,100

Hope that helps!

Michael Celender

Answer
by: Anonymous

$33.05

Answer
by: Anonymous

33.7312525

Shoes online( please answer quickly)
by: Anonymous

You are buying shoes online.The selling price is $29.99. Round to the nearest penny if necessary.

A.The sales tax is 6.5%. What is the total cost?

B. The cost of shipping is 15% of the total cost.What is the total cost plus shipping?

C. If the total cost plus shipping is greater than $35 then you receive a 10% discount off the original selling price.Do you qualify? If so, what is the new total cost plus shipping?

What is the Selling Price Based on Mark-up?
by: roselyn

How to find the selling price for a chair if it cost the retailer $225 if the retailer has a 55% markup based on cost?

Selling price = cost + mark-up
= 100% + 55%
= 155%

Selling price = 155/100 x $225
= $348.75

- Michael Celender
Founder of Accounting Basics for Students

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,
Michael Celender

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