Question

A men's clothing store marks up suits by 60% of cost. This provides an operating profit of 10% of the selling price. If a suit's cost to the store is $222: a. Determine its selling price. (Round your answer to 2 decimal places.)

Answer 1

The selling price of a suit marked up by 60% of its $222 cost and ensuring a 10% operating profit on the selling price is $394.67.

To calculate the selling price of a suit marked up by 60% of its cost, which is $222, we apply the markup to the cost by multiplying $222 by 1.60 (100% + 60%). This gives us the selling price before considering the operating profit. To ensure a 10% operating profit on the selling price, we use the equation Selling Price = Cost / (1 - Profit Percentage). For a 10% operating profit, we substitute Profit Percentage with 0.10 and the cost with the previously calculated cost with markup.

Selling Price = ($222 * 1.60) / (1 - 0.10) = $355.20 / 0.90 = $394.67 (rounded to two decimal places).

the selling price of the suit is $394.67 when rounded to two decimal places to ensure a 10% operating profit based on the selling price.