MKT 100 Study Guide - Profit Margin

132 views4 pages
21 Apr 2012
Department
Course
Professor
Worksheet: Metric 5 Mark-up & 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?
Answer:
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.
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?
Answer:
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
= 87.5%
3) A shoe store uses a 40% markup on cost. Find the cost of a pair of shoes that
sells for $63.
Answer:
The cost of the shoes is calculated as follows:
Selling Price = Cost + Markup ($)
= Cost + (Markup (%) * Cost)
$63 = Cost + (40% * Cost)
$63 = Cost + (0.4 * Cost)
$63 = (1 + 0.4) * Cost
$63 = 1.4 * Cost
Cost = $63 / 1.4
= $45
Unlock document

This preview shows page 1 of the document.
Unlock all 4 pages and 3 million more documents.

Already have an account? Log in

Get OneClass Grade+

Unlimited access to all notes and study guides.

Grade+All Inclusive
$10 USD/m
You will be charged $120 USD upfront and auto renewed at the end of each cycle. You may cancel anytime under Payment Settings. For more information, see our Terms and Privacy.
Payments are encrypted using 256-bit SSL. Powered by Stripe.