top of page

Cost Accounting

Concept and Calculation of Mark Up

Topic Menu
Content Contributors
Christian Bien Portrait_edited.jpg

Priya Kaur

Christian Bien Portrait_edited.jpg

Christian Bien

Learning Objectives

tutorial.png

one.png
What is Mark-Up?
Slide1.jpeg

Mark up is the percentage or amount added to the price or quote in the production of goods or services to cover costs and produce a profit. Businesses have a purpose of producing the largest profit available, without a markup, businesses will be running at breakeven levels producing no profit. In other words, it's the % of gross profit on a sale or providing a service. 

For example, if a painter was asked for a quote for a job and the job cost $100 but he quoted the customer $110, then the markup would be 10% or $10.

two.png
Calculation of a Mark-Up
Slide2.jpeg

To calculate a markup simply multiply the cost of a manufacture of a product or delivery of a service by the percentage amount. 


Example 1: If a job cost $150. A 20% markup would be: = $150 * 1.20 = $180 


Example 2: If a job cost $200 A 15 % markup would be: = $200 * 1.15 = $230 


Example 3: If a job cost $500 A 45% markup would be: =$500 *1.45 =$725

two.png
Finding the Percentage of Mark-Up
Slide2.jpeg

While this is unlikely to show up in a test or exam, to find the percentage markup remember: (New -Old)/Old * 100 


Example 1: If a quote was $725 and the cost of the job is $500. The markup would be: = (725-500)/500 *100 =225/500 *100 = 0.45 *100 =45% 


Example 2: If a quote was $800 and the cost of the job is $600 The markup would be: =(800-600)/600 *100 =200/600 *100 =0.33 *100 =33%

two.png
Slide2.jpeg
two.png
Slide2.jpeg
two.png
Slide2.jpeg
two.png
Slide2.jpeg
two.png
Slide2.jpeg
Time Orientation of Costs
Treatment of Costs
Relationship Costs
Behavioural Costs
Concept and Calculation of Mark Up
Direct Material Price Variance
bottom of page