Excel Formula to Add Margin to Cost (4 Suitable Examples)

If you are looking for some special tricks to add margin to cost using the Excel formula, you’ve come to the right place. There are numerous ways to add margin to cost in Excel. This article will discuss four suitable examples of adding margin to cost in Excel. Let’s follow the complete guide to learn all of this.

Different Types of Costs

There are different types of costs. Their description is given below:

1. Fixed Cost

Fixed cost includes the costs which remain unchanged whatever the production is in a time period. The business owner has to pay for the fixed costs in time even if there is no activity in production.

Components of Fixed Cost

• Rent: The charge to pay for the assets that the company has either rented or leased for a certain period.
• Salaries: The fixed payment that is disbursed to the employees on a regular basis.
• Insurance Fee: The routine charge for any insurance service of the company.
• Property Tax: The tax that the company has to pay to the government according to the value of assets
• The interest of Payments: The charge that the business needs to pay on the loan taken by the company. It will become a cost if the interest rate becomes fixed or the payment amount is fixed for a period.
• Depreciation: Depreciation cost is the cost to overcome the gradual decrease of asset value over the time period.
• Utilities: It includes all other types of costs which the company has to pay after a period of time regularly like electricity, gas, etc bills.

2. Variable Cost

Variable cost includes the costs that change by the amount of production. All the costs which vary with the units of product produced will be listed as variable costs.

Components of Variable Cost

• Direct Material: The raw material that the product contains itself.
• Direct Labor: The wages paid to the workers as per the amount of the unit production. It is the variable cost when the workers are on a temporary contract which depends on the production volume. For the permanent workers, it will be listed as a fixed cost.
• Billable Staff Wages: Sometimes, the company does pay wages on the billable hours. It can be due to overtime work or temporary hiring.
• Commissions: In business, to motivate the salespersons, the company pays a commission on them on the sold products.
• Production Supplies: The necessary tools and supplies that vary with the production level like machinery oils.
• Shipping Cost: during the shipment of a product, the company pays the shipping cost which varies with the number of units.

3. Operating Cost

Business operating expenses are the ongoing expenditures associated with running the business on a daily basis.

4. Total Cost

Costs incurred in achieving a particular output level are considered the total cost.

Excel Formula to Add Margin to Cost: 4 Examples

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

Now, we are going to calculate the margin in Excel.

📌 Steps:

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

• Then, press Enter.

• Then, drag the Fill Handle icon.
• As a consequence, you get the margin as shown below.

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.  Now, will show how to add margin to cost in Excel in the upcoming sections. Make sure you read them all. It will surely enrich your Excel knowledge. Let’s get into it.

We will use four effective and tricky ways to add margin to cost in Excel. This section provides extensive details on the four ways.  You can use either one for your purpose, they have a wide range of flexibility when it comes to customization. You should learn and apply all of these, as they improve your thinking capability and Excel knowledge. We use the Microsoft Office 365 version here, but you can utilize any other version according to your preference.

1. Adding Margin to Variable Cost

Here, we will demonstrate how to add margin to cost. Let us first introduce you to our Excel dataset so that you are able to understand what we are trying to accomplish with this article. For demonstration purposes, we are going to use the following dataset. Here, we have Particulars and Cost in the following dataset. For further calculations, we have inserted Margin and Cost (After Adding Margin) columns. Here, We use the SUM function to calculate the total cost with or without adding margin.

Let’s walk through the following steps to add margin to variable cost.

📌 Steps:

• First of all, to calculate the cost after adding margin, we will use the following formula in the cell E5:

• Then, press Enter.

• Next, drag down the Fill Handle icon.
• As a result, you will get the following cost after adding margin.

• Next, we are going to calculate the total variable cost without adding margin and the total variable cost after adding margin.
• To calculate the total variable cost without adding a margin,we will use the following formula in the cell D13:

• Then, press Enter.
• As a consequence, you will get the following value of the total variable cost without adding a margin.

• Next, to calculate the total variable cost after adding a margin,we will use the following formula in the cell D14:

• Then, press Enter.
• As a consequence, you will get the following value of the total variable cost after adding a margin.

2. Adding Margin to Fixed Cost

Here, we are going to add a margin to the fixed cost. For demonstration purposes, we are going to use the following dataset. Here, we have Particulars and Cost in the following dataset. For further calculations, we have inserted Margin and Cost (After Adding Margin) columns. Here, We use the SUM function to calculate the total cost with or without adding margin.

Let’s walk through the following steps to add margin to fixed cost.

📌 Steps:

• First of all, to calculate the cost after adding the margin, we will use the following formula in the cell E5:

• Then, press Enter.

• Next, drag down the Fill Handle icon.
• As a result, you will get the following cost after adding margin.

• Next, we are going to calculate the total fixed cost without adding margin and the total fixed cost after adding margin.
• To calculate the total fixed cost without adding a margin, we will use the following formula in the cell D14:

• Then, press Enter.
• As a consequence, you will get the following value of the total fixed cost without adding a margin.

• Next, to calculate the total fixed cost after adding a margin, we will use the following formula in the cell D15:

• Then, press Enter.
• As a consequence, you will get the following value of the total fixed cost after adding a margin.

3. Adding Margin to Operating Cost

Here, we are going to add a margin to the operating cost. For demonstration purposes, we are going to use the following dataset. Here, we have Items and Operating Cost in the following dataset. For further calculations, we have inserted Margin and Cost (After Adding Margin) columns. Here, We use the SUM function to calculate the total cost with or without adding margin.

Let’s walk through the following steps to add margin to operating cost.

📌 Steps:

• First of all, to calculate the cost after adding margin, we will use the following formula in the cell E5:

• Then, press Enter.

• Next, drag down the Fill Handle icon.
• As a result, you will get the following cost after adding margin using the Excel formula.

• Next, we are going to calculate the total operating cost without adding margin and the total operating cost after adding margin.
• To calculate the total variable cost without adding a margin, we will use the following formula in the cell D13:

• Then, press Enter.
• As a consequence, you will get the following value of the total operating cost without adding a margin.

• Next, to calculate the total operating cost after adding a margin,we will use the following formula in the cell D14:

• Then, press Enter.
• As a consequence, you will get the following value of the total operating cost after adding a margin.

4. Adding Margin to Total Cost

Here, we are going to add a margin to the total cost. For demonstration purposes, we are going to use the following dataset. Here, we have Particulars and Cost in the following dataset. For further calculations, we have inserted Margin and Cost (After Adding Margin) columns. Here, We use the SUM function to calculate the total cost with or without adding margin.

Let’s walk through the following steps to add margin to the total cost.

📌 Steps:

• First of all, to calculate the cost after adding margin, we will use the following formula in the cell E5:

• Then, press Enter.

• Next, drag down the Fill Handle icon.
• As a result, you will get the following cost after adding margin using the Excel formula.

• Next, we are going to calculate the total cost without adding margin and the total cost after adding margin.
• To calculate the total cost without adding a margin,we will use the following formula in the cell D13:

• Then, press Enter.
• As a consequence, you will get the following value of the total cost without adding a margin.

• Next, to calculate the total cost after adding a margin,we will use the following formula in the cell D14:

• Then, press Enter.
• As a consequence, you will get the following value of the total cost after adding a margin.

Download Practice Workbook

Download this practice workbook to exercise while you are reading this article. It contains all the datasets and methods in different spreadsheets for a clear understanding.

Conclusion

That’s the end of today’s session. I strongly believe that from now you may be able to ad margin to cost using an Excel formula. If you have any queries or recommendations, please share them in the comments section below.

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