# How to Add Margin to Cost Using an Excel Formula (4 Examples)

## Different Types of Costs

### 1. Fixed Cost

• Fixed costs remain unchanged regardless of the production level within a specific time period.
• Components of fixed costs include:
• Rent:Â Charges for assets rented or leased by the company.
• Salaries:Â Regular payments to employees.
• Insurance Fees:Â Routine charges for insurance services.
• Property Tax:Â Taxes paid to the government based on asset value.
• Interest Payments:Â Charges related to loans (become fixed costs if interest rates or payment amounts are fixed).
• Depreciation:Â Cost to account for the gradual decrease in asset value over time.
• Utilities:Â Regular payments for services like electricity and gas.

### 2. Variable Cost

• Variable costs change based on production volume.
• Components of variable costs include:
• Direct Material: Raw materials used in the product.
• Direct Labor:Â Wages for workers (variable for temporary contracts, fixed for permanent workers).
• Billable Staff Wages:Â Payments based on billable hours (e.g., overtime work or temporary hiring).
• Commissions:Â Paid to motivate salespersons based on product sales.
• Production Supplies:Â Tools and supplies that vary with production levels.
• Shipping Cost:Â Varies with the number of units shipped.

### 3. Operating Cost

• Ongoing expenses associated with daily business operations.

### 4. Total Cost

• The sum of all costs incurred to achieve a specific output level.

An organization’s profit from the sale of its products and services is known as the sales margin. The equation for calculating the margin is:

Margin (%)= (Selling Price- Cost)/ Selling Price

• To calculate the margin, we will enter the following formula in the cell E5:

`=(D5-C5)/D5`

This calculates the margin percentage.

• Press Enter.

• Drag the Fill HandleÂ icon to apply the formula to other cells if needed.

## General Formula to Add Margin to Cost

The general formula for adding a margin to cost is given below:

Cost After Adding Margin = (Cost)/(1-Margin)

Using the above formula, you will be able to add margin to cost.

## Example 1 – Adding Margin to Variable Cost

• Dataset Introduction:
• Imagine we have an Excel dataset with columns for Particulars, Cost, Margin, and Cost (After Adding Margin).
• Weâ€™ll use the SUM function to calculate total costs.

• Calculating Cost After Adding Margin:
• In cell E5, enter the formula:

`=C5/(1-D5)`

This calculates the cost after adding the margin.

• Press Enter.

• Drag down the Fill Handle icon to apply the formula to other cells (if needed).

• Total Variable Cost Without Margin:
• In cell D13, enter the formula:

`=SUM(C5:C10)`

This gives the total variable cost without adding a margin.

• Press Enter.

• Total Variable Cost After Adding Margin:
• In cell D14, enter the formula:

`=SUM(E5:E10)`

This provides the total variable cost after adding a margin.

• Press Enter.

## Example 2 – Adding Margin to Fixed Cost

• Calculating Cost After Adding Margin:
• Similar to the variable cost, enter the formula in cell E5:

`=C5/(1-D5)`

• Press Enter.Â
• Drag down the Fill Handle icon.

• Total Fixed Cost Without Margin:
• In cell D14, enter the formula:

`=SUM(C5:C11)`

This gives the total fixed cost without adding a margin.

• Press Enter.

• Total Fixed Cost After Adding Margin:
• In cell D15, enter the formula:

`=SUM(E5:E11)`

This provides the total fixed cost after adding a margin.

• Press Enter.

## Example 3 – Adding Margin to Operating Cost

• Dataset Introduction:
• Imagine we have an Excel dataset with columns for Items, Operating Cost, Margin, and Cost (After Adding Margin).
• Weâ€™ll use the SUM function to calculate total costs.

• Calculating Cost After Adding Margin:
• In cell E5, enter the formula:

`=C5/(1-D5)`

This calculates the cost after adding the margin.

• Press Enter.

• Drag down the Fill Handle icon to apply the formula to other cells (if needed).

• Total Operating Cost Without Margin:
• In cell D13, enter the formula:

`=SUM(C5:C10)`

This gives the total operating cost without adding a margin.

• Press Enter.

• Total Operating Cost After Adding Margin:
• In cell D14, enter the formula:

`=SUM(E5:E10)`

This provides the total operating cost after adding a margin.

• Press Enter.

## Example 4 – Adding Margin to Total Cost

• Calculating Cost After Adding Margin:
• Similar to the operating cost, enter the formula in cell

`=C5/(1-D5)`

• Press Enter.

• Drag down the Fill HandleÂ icon.

• Total Cost Without Margin:
• In cell D13, enter the formula:

`=SUM(C5:C7)`

This gives the total cost without adding a margin.

• Press Enter.

• Total Cost After Adding Margin:
• In cell D14, enter the formula:

`=SUM(E5:E7)`

This provides the total cost after adding a margin.

• Press Enter.

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