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19 December, 00:50

4. The owner of a sporting goods store has decided on a 250 percent

markup on all apparel. How much will the store charge for bicycle

shorts it purchased from the wholesaler for $10 each? What did the

store pay for running shoes that it is selling for $70? (LO 8.2-2)

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Answers (1)
  1. 19 December, 00:56
    0
    Part A. Profit Markup $25 per unit

    Part B. Profit Markup $50 per unit

    Explanation:

    Always remember that while calculating Markup, the cost is always deemed 100%. This means

    Sales = Cost + Markup

    120% = 100% + 20%

    Mathematically,

    Markup = Cost * %age we want that is Markup %age / %age we are standing at

    Part A. As we know that the cost of the product is $10 which 100% and the Markup percentage is 250% in the question.

    By putting values, we have:

    Markup = $10 * 250% / 100% = $25 per unit

    Part B. The company under the markup system, would pay the cost which is always 100%.

    So here, selling price is given which is $70 which includes 100% and 250% profit markup. This means $70 is 350% (100% Cost + 250% Profit Markup).

    Mathematically,

    Profit Markup = Sales * Markup %age (%age we want) / %age we are at

    Sales is 350%, so we are at 350%

    Profit Markup = $70 * 250% / 350% = $50 per unit
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