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What is the concept of Mark Up (MU) button in a calculator ?

Discussion in 'The Courtyard Café' started by Khun Ying Pojaman, Sep 11, 2011.

  1. Khun Ying Pojaman

    Khun Ying Pojaman Alfrescian Old Timer

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    Generally speaking, if the cost of your product is $100 and your mark up is 20%, your selling price after mark up is $120.

    But this is not the case if you're using the MU button in a calculator.

    You key in 100/20 MU = 125.

    So instead of marking up by 20%, it ended up 25%.

    Does anyone know the rationale behind this MU button when used in a calculator ?
     
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  2. chupacabra

    chupacabra Alfrescian Old Timer

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    it just make you feel that u got more money than you actually have. Feel good button i thimk
     
    Last edited: Sep 11, 2011
  3. Khun Ying Pojaman

    Khun Ying Pojaman Alfrescian Old Timer

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    Taken from Wiki:

    MU stands for Mark Up, which is for calculating Gross margin used in business environments. There are different methods of calculating this, depending on the model of the calculator.
    Below some examples that works with my calculator:

    Example 1: Enter 100 then press the divide key, then enter 15 then press the MU key, which displays 117.65 (15% of this total equates to 17.65)

    Example 2: Enter 125 (selling price) then press the minus key, then enter 100 (seller's costs) then press the MU key, which displays 25 (25% Gross margin)

    It's example 1 that I'm referring to. It doesn't explain the connection between 17.65 and the cost price of 100.
     
  4. Zombie

    Zombie Guest

    20% = Profit Margin = Gross Profit / Sales = 25 / 125
     
  5. Khun Ying Pojaman

    Khun Ying Pojaman Alfrescian Old Timer

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    Okay, I think I know what you mean.

    The mark up is expressed as a percentage of the sale price, not the cost price.

    But what is the rationale and how did the initial cost price of $100 play a part if we are to expressed the formula in words ?
     
    Last edited: Sep 11, 2011
  6. Ramseth

    Ramseth Alfrescian (Inf)

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    Zombie is right. The input is cost price, the variable is MU (20%) and the output is marked up price. The $25 is 20% of $125. If you want a simple percentage equation, there's no need for MU function. Just use the % function.
     
    Last edited: Sep 11, 2011
  7. Unrepented

    Unrepented Alfrescian Old Timer

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    When people in the market say; 25% markup. It means cost is 100% (the reference) , sales prices is thus 125%. That what marked up.
    To make it clear to the audience or your customer; "just say 25% markup on cost".

    When people inthe market say; 20% gross margin. It means sales is 100% (denominator), cost is 80% and GP is 20%. That what margin means.
    In this case, just say "20% margin on sales (price)."

    Dont need to get to uptight on how to say it. Just tell people how many percentage up from the reference point. No point using professional language if the audience don't understand. Keep It Simple and Short (KISS). :p

     
    Last edited: Sep 11, 2011
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  8. Unrepented

    Unrepented Alfrescian Old Timer

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    Think of it this way; 25 is one fifth of 125, therefore 20%. Hope I didnt confuse you :eek:

     
  9. Zombie

    Zombie Guest

    try [ 100 X 20 MU ] to see if you can get what you expected

    :)
     
  10. Khun Ying Pojaman

    Khun Ying Pojaman Alfrescian Old Timer

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    I'm not if it's solely a matter of terminology because the calculator uses MU to mean 'Mark Up', and it's computed based on cost.

    Of course 25 is one fifth of 125. The mathematics is not a problem; it's the concept that I'm confused.

    When you say 25 is one fifth of 125, which in percentage term is 20%. But my question is not about mathematics, it's more about how you relate it to the cost price of 100.

    25 is 20% of 125 says nothing about the cost price of 100.
     
  11. Khun Ying Pojaman

    Khun Ying Pojaman Alfrescian Old Timer

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    Yes, I get 120. But my sharp calculator instructions say to use 'divide' instead of 'multiply', which, if I use 'divide' I will get 125 instead.

    And you see Wiki also uses the same concept.
     
  12. Ramseth

    Ramseth Alfrescian (Inf)

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    Use the % function, not the MU function, you'll get the result according to your expectation and mathematics. It's a matter of tenses. Mark up pricing or marked up price, expressed in percentage of final sale price or initial cost price. Calculator manufacturers offer both options in % and MU buttons. Take your pick.
     
  13. Unrepented

    Unrepented Alfrescian Old Timer

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    Then it says your cost of 100 is 80%. Margin is 20%. Markup is 25%.

    1. Take 100 multiply 25 MU equals 125.

    2. Take 100 divide by 0.8 equals 125. Means 80% of 125 is 100.

    3. Take 100 divide 20 MU equals 125.

    Compare 1, 2 & 3 & and you will know the function of MU.

    Are you having problems with your calculator functions? If so, then google your brand of cal and the model for the manual. There are slight differences among calculators.

     
    Last edited: Sep 11, 2011
  14. Unrepented

    Unrepented Alfrescian Old Timer

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    Last.

    MU key actives a pre-programmed algorithm in the calculator.

    Example:

    30% markup on $100

    1. $100 multiply 30 MU equal $130

    2. $100 divided by {[$100/130]=0.7692} equals $130 (0.7692 is a value to be input by user)

    3. $100 divided by ({[1-($100/130)]X100}=23.0769) MU equals $130 (23.0769 is a value to be input input by user)

    Therefore, the "multiply" or "divide" button in your calculator is a pre condition for the selection of the pre-programmed algorithm when the "MU" is subsequently pressed.

    Alogrithm reworks the value input by user to derive the value in item 2 which is 0.7692 (a variable) and become denominator for initial input value (100).
     
    Last edited: Sep 12, 2011

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