Business FinancesQuestion 1108 of 1605
Which statement about markup and margin is correct?
a.Margin is always larger than markup for the same dollar profit
b.Margin is calculated on the selling price; markup is calculated on cost
c.Markup is calculated on the selling price
d.Markup and margin are always the same percentage
Explanation
Margin expresses profit as a percentage of the SELLING price, while markup expresses the same dollar profit as a percentage of COST. Because the selling price is larger than cost, the margin percentage is always smaller than the markup percentage for the same dollar profit.
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