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