Calculating Profit Margin Concepts

The video tutorial explains the difference between markup and profit margin. It begins by introducing the concepts and then demonstrates how to calculate gross profit using the formula: price minus cost. The tutorial proceeds to explain how to calculate markup by dividing profit by cost and converting it to a percentage. Next, it covers the calculation of profit margin by dividing profit by price and converting it to a percentage. The video concludes with a summary of the differences between markup and profit margin, emphasizing the importance of understanding these financial metrics.

What is the initial cost of the product in the example?

• $500

• $400

• $700

• $600

How much is the selling price of the product?

• $600

• $800

• $900

• $700

What is the selling price of the product in the example?

• $600

• $700

• $800

• $900

What is the formula used to calculate gross profit?

• Cost minus price

• Price divided by cost

• Cost divided by price

• Price minus cost

What is the gross profit in the given example?

• $200

• $100

• $250

• $150

In the context of the video, what does the term 'gross profit' refer to?

• Profit after expenses

• Profit before expenses

• Net profit

• Total revenue

How is markup calculated?

• Price divided by profit

• Profit divided by cost

• Cost divided by profit

• Profit divided by price

What is the markup percentage in the example?

• 25%

• 66.67%

• 33.33%

• 50%

Why do we multiply by 100 when calculating percentages?

• To convert a fraction to a percentage

• To increase the value

• To decrease the value

• To simplify the calculation

What is the formula for calculating profit margin?

• Profit divided by cost

• Cost divided by price

• Price divided by profit

• Profit divided by price