Final answer:
The rate of markup on cost is 14.08%, and the rate of markup on selling price is 12.34%, both calculated using the difference between the selling price and the cost price and then adjusted by the appropriate base (cost or selling price).
Step-by-step explanation:
To answer the student's question about the rate of markup on cost, first, we calculate the markup amount, which is the selling price minus the cost.
The markup on cost is then found by dividing the markup amount by the cost and multiplying by 100 to get a percentage.
The markup amount = Selling price - Cost = $320.00 - $280.50 = $39.50
Rate of markup on cost = (Markup amount ÷ Cost) × 100 = ($39.50 ÷ $280.50) × 100 = 14.08%
To find the rate of markup on selling price, we divide the markup amount by the selling price and again multiply by 100 to get the percentage:
Rate of markup on selling price = (Markup amount ÷ Selling price) × 100 = ($39.50 ÷ $320.00) × 100 = 12.34%