Question

In this question you need to complete the below calculations and find out the most and least profitable company out of 5 mentioned below. Bring an example and calculate the EBIDTA for the most profitable company.

a. How much is the margin (in number and %) if the sale price = $100 and cost = $12
b. How much is the mark up (in number and %) if the sale price = $80 and cost = $40
c. How much is the margin (in number and %) if the sale price = $75 and mark up 45%
d. How much shall the product be sold if the cost = $20 and margin = 49%
e. If you know that the cost = $15 and markup = $30, please find margin in %

Answer 1

Calculations for the five companies are as follows -

a. Sale price = $100

Cost = $12

Margin = Sale Price - Cost

= 100 - 12

= $88

Margin percentage = (Margin amount / Selling price) *100

= (88/100) * 100

= 0.88 * 100

= 88%

Thus, margin is equal to 88%

b. Sale price = $80

Cost = $40

Mark up = Sale price - cost

= 80 - 40

= $40

Markup percentage = (Markup / Cost) * 100

= (40 / 40) * 100

= 1 * 100

= 100%

Here, markup percentage is equal to 100%, while margin is 50%

c. Sale Price = $75

Markup = 45%

Markup% * Cost + Cost = Selling Price

Let us assume cost to be c.

45%*c + c = 75

0.45c + c = 75

1.45c = 75

c = 75/1.45

c = $51.72

Now, margin = Sale price - cost

= 75 - 51.72

= $23.28

Margin percentage = (Margin amount / Selling price) *100

= (23.28 / 75) * 100

= 0.3104 * 100

= 31.04%

Thus, margin here is equal to 31.04%

d. Cost = $20

Margin = 49%

Now, Margin% = {(Selling price - cost) / Selling Price} * 100

Let us assume Selling price to be s.

49 = {(s - 20) / s} * 100

49s = 100s - 2000

2000 = 100s - 49s

2000 = 51s

s = 2000 / 51

s = $39.22

Here, product will be sold at $39.22.

e. Cost = $15

Markup = $30

Now, Selling price = cost + Markup

= 15 + 30

= $45

Margin percentage = (Margin amount / Selling price) *100

= (30 / 45) * 100

= 0.66 * 100

= 66.66%

Thus, margin is equal to 66.66%.

The most profitable company here is company a with the higest margin of 88%.