To find the markup of goods, the formula to use is selling price of product = product cost + markup. An example of this type of problem is when a retailer buys an item at $6 (cost) and sells it at $7.20. Using the formula and this information, students can calculate the markup and the markup percent rate.
Continue ReadingTo make a profit, store owners use a selling price that is based on the original cost of an item and a markup percent rate. These types of problems entail finding the percent change relative to the original product cost of items.
Substitute the values for the selling price and cost of product into the formula selling price of product = product cost + markup to get $7.20 = $6 + markup. Subtract $6 from both sides to find the markup as $1.20.
Calculate the markup percent rate by knowing that the markup of $1.20 is a percent Y of the original product cost, or 1.20 = Y x 6. Find Y by dividing both sides of the equation by 6 to get the answer as 0.2. Convert 0.2 to a percentage by multiplying it by 100 percent to arrive at the answer of 20 percent as the markup percent rate.
If the store owner wants a higher selling price than $7.20, then he needs to use a markup percent rate that is higher than 20 percent for the given cost of $6.
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