# 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.

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%