Multiple Choice
Which of the following details best indicates that Edward was making a good profit from his sales?
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4. Merchandising Operations
Net Sales
Multiple Choice
Which of the following statements best describes the difference between markup and margin?
A
Markup is calculated as a percentage of cost, while margin is calculated as a percentage of sales.
B
Markup and margin are both calculated as a percentage of cost.
C
Markup and margin are both calculated as a percentage of sales.
D
Markup is calculated as a percentage of sales, while margin is calculated as a percentage of cost.
Verified step by step guidance1
Understand the definitions of markup and margin: Markup is the percentage added to the cost of a product to determine its selling price, while margin is the percentage of the selling price that represents profit.
Recognize the key difference: Markup is calculated based on the cost of the product, whereas margin is calculated based on the selling price of the product.
Analyze the options provided: Compare each statement to the definitions and key difference between markup and margin.
Eliminate incorrect options: For example, 'Markup and margin are both calculated as a percentage of cost' is incorrect because margin is based on sales, not cost.
Select the correct answer: The statement 'Markup is calculated as a percentage of cost, while margin is calculated as a percentage of sales' accurately describes the difference between markup and margin.
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