1
MARK UP CALCULATIONS
Gross Profit/Loss
The difference between what an article costs and what it is sold for is the gross profit or gross loss. That is, if
the cost price (CP) is less than the selling price (SP), a gross profit (GP) is made and if the cost price (CP) is
more than the selling price (SP), then a gross loss (GL) is made.
GP = SP - CP or GL = CP - SP.
Exercise 1.1
1.
Find the profit/loss in each case.
State whether it is GP or GL.
Number
Cost price
Selling price
(a)
R100
R136
(b)
R5,20
R6,20
(c)
R18
R15
(d)
R2,89
R3,15
(e)
(f)
(g)
R28,28 R16,15 R23,20
R30 R12,18 R23,20
2.
The cost of 12 articles is R180 and they are sold at R20 each. What is the total gross profit?
3.
For a manufacturer to make an item, it costs R33 per item. He/she sells a box of 15 for R675.
What is his gross profit per item?
4.
A shop owner pays R1,50 for a certain chocolate. What does he/she have to sell a box of 24 of
these chocolates for if he wants to make a gross profit of R18,60 on the box of 24 chocolates?
5.
A farmer buys 20 heads of cattle at R550 each. After a drought he/she sold them and his/her gross
loss was R 1 400. What was the selling price per head of cattle?
Gross Profit/Gross Loss Percentages
Gross profits and gross losses are usually expressed in terms of a percentage of the cost price. This is
referred to as Mark-Up Percentage on Cost.
grossprofi t
 100%
Mark Up %
=
cost price (CP)
In accounting, reference is sometimes made to mark up on selling price (i.e. gross profit percentage), the
calculation will then be:
grossprofit
 100%
Gross Profit %=
Sales
Example 1:
The gross profit on an article that cost R110 is R20. What is the gross profit percentage?
grossprofit
 100%
Gross Profit %=
Sales
20
 100% = 15.38%
=
130
Example 2:
What is the mark-up percentage, if an article's cost price is R215 and the selling price is R250?
Gross Profit
= SP - CP
Mark up %
= 250 – 215 = R 35
grossprofi t
 100%
=
cost price (CP)
35
 100%
215
= 16,28%
=
2
Exercise 1.2
Calculate the mark-up percentage in the following cases:
1.
A shop owner buys a box of soap (containing 50 bars of soap) for R45. He/she sells the soap for
R1,20 a bar.
2.
A farmer buys 30 sheep and 15 pigs for R1 175. He/she sells the sheep for R60 and the pigs for
R25 each.
Calculate the gross profit percentage in the following cases:
3.
A manufacturer makes 50 articles at a total cost of R600. He/she sells half for R15 and then
increases his/her price by R5 and sells the other half.
4.
A person buys a second hand car for R3 800. He/she spends R500 on spare parts and R200 on
fixing the car. He/she sells the car for R5 400.
Calculating Cost Price (CP), Selling Price (SP) and Gross Profit or Loss (GP/GL)
Example:
A dealer makes 20% gross profit on cost on all his/her goods. What is his/her (a) gross profit
and (b) selling price, of goods costing R500?
CP
= 100% = R500
Gross Profit = 20%
SP
= 120%
20
Gross Profit = 500 
= R100
100
120
= R600
 Selling price = 500 
100
Exercise 1.3
1.
What is the (a) gross profit and (b) selling price, if an article's cost price is R35 and the mark up
percentage is 20%?
2.
What is the cost price of an article, if a 25% mark up yields a R30 gross profit?
3.
Complete the following table:
CP
SP
Gross Profit
Gross profit percentage
R150
(b)
(a)
10 %
(c)
(d)
R6,75
15 %
Summary of Exercises
1.
A shopowner buys 60 shirts for R1 800. He/she sells half for R120 each and the other half for
R100 each.
(a) What is his/her gross profit?
(b) What is his/her gross profit percentage?
2.
A manufacturer makes articles at a cost of R35 each. He/she sells them in boxes of 20 for R2 000.
What is his/her gross profit percentage?
3.
A clothing store has a fixed gross profit percentage. They buy a container with 100 pairs of shoes
for R3 200. They sell the shoes for R128 a pair.
(a) What is the store's mark-up percentage?
(b) What do they have to sell a dress for if they buy 100 dresses for R4 000?