### Cost Accounting

#### Concept and Calculation of Mark Up

###### What is Mark Up?

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.

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.

###### Calculation of Mark Up

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

Finding the Percentage Markup

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%