Lesson ProgressPhase 5 of 6
Phase 5Assessment
Assessment: Markup vs. Margin Concepts
Demonstrate understanding through formative assessment and peer evaluation
Assessment: Markup vs. Margin
Apply what you've learned across all four phases. This quiz draws on Sarah's story, the formulas from Phase 2, the cost structure from Phase 3, and the scenario analysis from Phase 4. Explanations are shown after each answer.
Markup vs. Margin Mastery Check
Technical calculations, business application, and strategic thinking
1. TechStart's variable cost for a web project is $880. Sarah charges $1,200. What is her markup percentage?
2. Using the same TechStart project ($880 cost, $1,200 price), what is the gross margin percentage?
3. Sarah wants a 40% gross margin on projects that cost $880 to deliver. What price must she charge?
4. TechStart has $8,100 in monthly fixed costs, $880 variable cost per project, and charges $1,200. How many projects per month to break even?
5. Alex asks for a $600/month raise, raising TechStart's fixed costs from $8,100 to $8,700. How many additional projects per month does Sarah now need to break even?
6. TechStart's break-even is 26 projects per month. Sarah currently completes 25. What does her income statement look like?
7. Sarah wants $5,000 monthly profit and currently completes 25 projects per month. If volume is fixed, what price must she charge?
8. TechStart's contribution margin per project is $320 and the project price is $1,200. What is the contribution margin ratio, and what does it mean?
9. Sarah tells a client her markup on an $880 project is 36.4%. The client's financial advisor says her margin is only 26.7%. Sarah panics. Who is right?
10. A competitor offers the same services at $900 per project. An advisor suggests Sarah match the price to win more clients. Given TechStart's $880 variable cost, what does the data show?
0 of 10 questions answered
Where These Skills Are Used Daily
The calculations you just worked through are used every day by:
- • Business Consultants — advising clients on pricing strategy
- • Financial Analysts — evaluating company profitability
- • Entrepreneurs — setting prices for new ventures
- • Sales Managers — developing pricing guidelines
- • Product Managers — optimizing product line profitability
- • Investment Analysts — assessing investment opportunities
- • Small Business Owners — managing day-to-day pricing
- • Corporate Finance Teams — supporting strategic planning
Looking Ahead: Advanced CVP Analysis
Markup vs. margin mastery is the foundation for what comes next: building sophisticated Cost-Volume-Profit models in Excel. You'll use Goal Seek and Data Tables to create investor-ready pricing recommendations Sarah can defend to real business stakeholders.
- • Day 3: CVP Model Construction with Excel automation
- • Days 6–7: Goal Seek and Data Tables for sensitivity analysis
- • Day 10: Town Hall Pricing Debate with real business stakeholders