Assume an item has an invoice cost of $15 and a selling price of $20.
Compute the markup both as a percentage on selling price and percentage on cost.
What Is A Markup:
It is common for companies that are in the distributor/wholesale business to set their prices using markup. A Markup is a fixed percentage on either the cost of the item purchased or the selling price to the customer that it used to assure a steady gross profit.
Answer and Explanation:
The markup = Selling price - invoice cost
=20 - 15
Markup as percentage of selling price = markup / selling price
Markup as a percentage of cost = Markup / cost
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Learn more about this topic:
from Principles of Marketing: Help and ReviewChapter 12 / Lesson 22