Assume an item has an invoice cost of $15 and a selling price of $20. Compute the markup both as...

Question:

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

=$5

Markup as percentage of selling price = markup / selling price

=5/20

=25%

Markup as a percentage of cost = Markup / cost

= 5/15

=33%


Learn more about this topic:

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How to Calculate Markup: Definition & Formula

from Principles of Marketing: Help and Review

Chapter 12 / Lesson 22
82K

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