Question

A seller buys an item from a manufacturer for $100 and sells it to a customer for $120. which of these terms describes this extra $20?

a. costb. pricec. markup

Answer 1

markup

Explanation:

sellers buy items from manufacturers and need a profit whenever they sell a product. Therefore, they cannot allow the cost price to equal the selling price. So they add an extra amount, called a markup, to the cost price to arrive at the selling price.

Answer 2

Markup: The amount added to the cost price of goods to cover overhead and profit.