Exam L4M5 Topic 4 Question 61 Discussion

Actual exam question for CIPS's L4M5 exam
Question #: 61
Topic #: 4
A supplier can produce a product for $160 and sells it for $240, making $80 profit. What is the mark-up profit percentage?

Suggested Answer: A Vote an answer

Mark-up % = Profit ÷ Cost × 100. Here, profit is $80, cost is $160. So, (80 ÷ 160) × 100 = 50%. This differs from margin, which is profit ÷ selling price. Mark-up analysis helps buyers understand supplier pricing structures, detect hidden margins, and strengthen negotiation. By knowing whether a supplier is working with high or low mark-up levels, buyers can challenge prices more effectively or justify alternative offers. This analytical preparation supports objective negotiation rather than reliance on supplier claims.
Reference: CIPS L4M5 (2nd ed.), LO 2.2 - Understanding costing (mark-up vs margin) in negotiation prep.

by Phyllis at Nov 11, 2025, 09:13 AM

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