Day: March 30, 2020

A firm’s gross profit margin is 20%. Its mark-up on cost is?

Select ONE answer:

1. 16 2/3rds %
2. 22%
3. 25%
4. 30%

 

Show your workings to arrive at your answer, and explain and justify your reasons:

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This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct – Gross Profit Margin = Gross Profit as a percentage of selling price = 20%.  Let the selling price = £100.  Therefore, gross profit = £20.  Therefore, cost = £80.  The mark-up on cost = Profit as a percentage of cost price.  £20 / £80 = 25%.
4. Not correct

 

 

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