Markup and Purchasing Managers' Index: Difference between pages

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imported>Doug Williamson
(Create page. Sources: linked pages.)
 
imported>Doug Williamson
(Add 2nd & 3rd definitions. Source: CIPS webpage https://www.cips.org/en-gb/who-we-are/news/uk-manufacturing-pmi-remains-stuck-at-six-and-a-half-year-low-in-july/)
 
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''Cost and management accounting''.  
(PMI).


Markup is an amount added to relevant costs, to calculate a selling price.
1. ''Economic indicators - US.''


It is usually expressed as a percentage of relevant costs.
The US Purchasing Managers' Index measures new orders, production, employment and supplier deliveries, based on a survey of North American manufacturing businesses.


Relevant costs will usually, but not always, be direct costs of production.
It is an important measure of economic activity.




Markup is calculated in the same way as Margin on costs, using the same inputs:
The US PMI is published monthly by the US Institute for Supply Management.


''Markup = profit '''÷''' costs''


2. ''UK''.


<span style="color:#4B0082">'''Example 1: Markup calculation'''</span>
A similarly-structured index for UK manufacturing.


Selling price = 100
The UK PMI is published by IHS Markit and the Chartered Institute for Procurement and Supply (CIPS).


Relevant costs = 70


3.


The surplus (profit):
Similar indices for other economies.
 
= selling price - costs
 
= 100 - 70
 
= 30.
 
 
And the markup:
 
= profit / costs
 
= 30 / 70
 
= '''42.9%'''.
 
 
''Note the Markup is normally used in a planning and price setting context, looking ahead. The similarly calculated Margin on costs may be seen equally in both historic accounting contexts and in planning and price setting.''
 
 
<span style="color:#4B0082">'''Example 2: Price setting using markup'''</span>
 
Costs = 70
 
Markup = 42.9%
 
Calculate the selling price
 
 
Required surplus (profit):
 
= 70 x 0.429
 
= 30.
 
 
Selling price:
 
= costs + profit
 
= 70 + 30
 
= '''100'''.
 
 
Short cut calculation:
 
''Selling price = costs x (1 + markup)''
 
= 70 x (1 + 42.9%)
 
= 70 x 1.429
 
= '''100''' (as before).




== See also ==
== See also ==
* [[Cost]]
* [[Chartered Institute for Procurement and Supply]]
* [[Direct costs]]
* [[Institute for Supply Management]]
* [[Management accounting]]
* [[PMI]]
* [[Margin]]
* [[Overheads]]
* [[Profit margin]]
* [[Profit]]


[[Category:Accounting,_tax_and_regulation]]
[[Category:The_business_context]]
[[Category:The_business_context]]
[[Category:Financial_products_and_markets]]

Revision as of 14:25, 28 August 2019

(PMI).

1. Economic indicators - US.

The US Purchasing Managers' Index measures new orders, production, employment and supplier deliveries, based on a survey of North American manufacturing businesses.

It is an important measure of economic activity.


The US PMI is published monthly by the US Institute for Supply Management.


2. UK.

A similarly-structured index for UK manufacturing.

The UK PMI is published by IHS Markit and the Chartered Institute for Procurement and Supply (CIPS).


3.

Similar indices for other economies.


See also

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