Answer:
the markup is 1.26 (the amount added is .26)
1.26x (when x is the price Fred buys them for from the manufacturer)
1.26(40)
$50.40 is the retail price
50.4-40
$10.40 is the markup
Explanation:
The 26% markup means that he is selling the flags 26% above the cost.
So, the cost would represent 100%, which is 1, and 26% of markup in decimal number is 0.26.
The price including the markup would be 1.26 as decimal or 126% as percentage.
The problem states that the cost is unknown, so we represent that with a variable x. The retail price would be 1.26x, which is 126% per flag.
Finally, if Fred paid $40 per flag, the actual retail price would be:
1.26($40)=$50.40.
With $10.40 of markup.