If a garage is using genuine parts then they will get the parts at trade price which is is only around 10-15% off retail and the car manufacturer tells them the RRP that they have to charge.
Its daft if a garage charges more than the RRP for the parts because its easy to find out.
And yes garages do make a tiny bit of money on the parts aswell as the labour. Its just the way it is, its part of how they make money. You bring you own parts. depending on the job they will slightly increase the labour quote to compensate from the lack of profits from the parts.
the rrp for a genuine belt kit is approx £150. The Trade price is £85+vat. Thats a lot more than 10-15% discount. Making over £120 on parts prices (the OPs qoute) seems excessive. Still be cheaper to ask for a labour only price and get parts elsewhere.