Worksheet: Metric 5 Markup & Margin
1) A computer software retailer uses a markup rate of 40%. If the retailer pays $25 each for
computer games sold in its stores, how much do the games sell for?
2) A golf pro shop pays its wholesaler $40 for a certain club, and then sells that club to
golfers for $75. What is the retail markup rate?
3) A shoe store uses a 40% markup on cost. Find the cost of a pair of shoes that sells for
4) In 2009, Donna Manufacturing sold 100,000 widgets for $5 each, with a cost of goods
sold of $2. What is the company’s margin? Identify a way that Donna Manufacturing can
increase its profit margin?
5) If a product costs $100 and is sold with a 25% markup at a retail store, what would be the
retailer’s margin on the product? What should be the markup and selling price if the
retailer desires a 25% margin? Why might the retailer be seeking to increase their
Answer to Question 1:
The markup is 40% of the $25 cost, so the markup is:
(0.40) * ($25) = $10
Then the selling price, being the cost plus markup, is:
$25 + $10 = $35
Therefore the games sell for $35.
Answer to Question 2:
The gross profit in dollars is calculated as sales price less cost:
$75 $40 = $35
The markup rate is then calculated:
Markup (%) = Gross Profit / Cost *100
= $35 / $40 *100
Answer to Question 3:
The cost of the shoes is calculated as follows:
Selling Price = Cost + Markup ($)
= Cost + (Markup (%) * Cost)
$63 = Cost + (40% * Cost) $63 = Cost + (0.4 * Cost)
$63 = (1 + 0.4) * Cost
$63 = 1.4 * Cost
Cost = $63