WAEC Accounting 2021 Paper

Concept:Mark-up is profit expressed as a percentage of cost price.Margin is profit expressed as a percentage of selling price.So a 50% mark-up does not mean a 50% margin.Explanation:Let the cost price be $100$.A 50% mark-up on cost gives profit $= 50\% \text{ of } 100 = 50$.Selling price $= \text{Cost price} + \text{Profit} = 100 + 50 = 150$.Margin is calculated on selling price.Therefore, margin $= \frac{\text{Profit}}{\text{Selling price}} \times 100\% = \frac{50}{150} \times 100\% = 33\frac{1}{3}\%$.Hence, a 50% mark-up is equivalent to a margin of $33\frac{1}{3}\%$.Answer:D. $33\frac{1}{3}\%$