DEMONSTRATION 3 — Technical Review:

DEMONSTRATION 3 — Technical Review: Markup vs Margin AI-assisted educational sample using hypothetical numbers. No client engagement claimed. Claim to audit: “A product costing $100 and sold for $120 earns a 20% margin.” Review: gross difference = $120 - $100 = $20. Markup uses cost as denominator: 20/100 = 20%. Margin uses sales as denominator: 20/120 = 16.67%. The claim confuses two different measures. To target a 20% margin on the same cost boundary: price = 100/(1-0.20) = $125. Check: (125-100)/125 = 20%. Technical reporting method: define the cost boundary, state whether price excludes taxes, keep periods and units consistent, recalculate the claim, and separate a numerical correction from a business recommendation. Actual net profit also depends on expenses outside the selected cost boundary.