What is the difference between markup and margin?

Does Margin and/or Markup loss occur?

• I'm writing an essay about obsolete inventory. If a company updates it standard cost for inventory every quarter, from let's say $100 to $125 and the selling price remains the same in that period of time, does margin loss occur? At first I thought it was, however if you buy anything for $100 and the market-price and thus the standard increases to $125, you gained $25.. current market value is higher than the historical purchase price. So you will have a higher margin/profit on the old product than on the new ones.. I'm a little bit confused and can use some help.. thanks!

• Answer:

  the inventory would be recorded as higher and you would put the gain in receivables and the income statement, the actual profit wouldn't change from the sale of these inventory as you purchased them for 100 and sold them for 150 means you made 50 even if suddenly the NRV was 125. you would have to increase selling price to increase your profit margin already purchased inventory can't change this. Obsolete inventory means is value has decreased mainly you would record this loss in your income statement and inventory would go down, The only thing obsolete inventory that can't be sold will simply cost you money. Deterioration of stock, new substitute product, further development in technologies even depending on the seasons say christmas time is when something is popular and a christmas tree will never make it to the next winter its useless stock. I see what your trying to say so if you do end up having stock thats value is pretty low you may drop your profit margin altogether even just to break even like when tesco sell food thats just about to go out of date at something near cost price. In this case i guess it is reasonable to say it can affect it. But its the seller's decision to lower the selling price bear tha in mind. I hope the examples are decent enough.