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14 August, 14:35

Misu Sheet, owner of the Bedspread Shop, knows his customers will pay no more than $150 for a comforter. Misu Sheet wants to advertise the comforter as "percent markup on cost." What is the equivalent rate of percent markup on cost compared to the 20% markup on selling price?

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  1. 14 August, 15:11
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    Answer with Explanation:

    As we know that:

    Selling Price = Cost + Markup

    And using markup on cost, the cost is always 100%

    So

    Selling price %age = 100% + 20% = 120%

    So

    Cost 100% = $150 * 100% / 120% = $125

    But when percent markup on selling price is used, then the selling price is always 100% which is equal to $125.

    So

    Selling price 100% = Cost 80% + Markup 20%

    $125 = Cost 80% + ($150-$125)

    $125 - $25 = Cost

    Cost = $100

    Equivalent rate of percent markup on cost will be:

    Equivalent rate of percent markup on cost = $50 / $100 = 50%

    The answer is 50%.
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