BUSINESS ADMINISTRATION
ACCOUNTING FOR MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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price = cost + a fair share of profit
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the price a competitor sets
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Detailed explanation-1: -Markup shows profit as it relates to costs. Markup usually determines how much money is being made on a specific item relative to its direct cost, whereas profit margin considers total revenue and total costs from various sources and various products.
Detailed explanation-2: -Markup refers to the difference between the selling price of a good or service and its cost. It is expressed as a percentage above the cost. In other words, it is the premium over the total cost of the good or service that provides the seller with a profit.
Detailed explanation-3: -Definition: Mark up refers to the value that a player adds to the cost price of a product. The value added is called the mark-up. The mark-up added to the cost price usually equals retail price. For example, a FMCG company sells a bar of soap to the retailer at Rs 10.
Detailed explanation-4: -The markup formula is as follows: markup = 100 × profit / cost . We multiply by 100 because we express markup as a percentage, not as a fraction (25% is the same as 0.25 or 1/4 or 20/80).