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