Final answer:
Markup percentage is the ratio of the difference between the selling price and the cost price to the cost price, expressed as a percentage. It is calculated by dividing the difference (markup) by the cost price and then multiplying by 100. This concept is integral to business pricing strategies and profit analysis.
Step-by-step explanation:
The concept of markup percentage involves calculating the percentage difference between the selling price and the cost price of an item, relative to its cost price. Specifically, the markup percentage is found by taking the difference between the selling price and the cost price (also known as the markup), dividing it by the cost price, and then multiplying by 100 to convert it to a percentage.
This calculation falls under the broader mathematical concept of calculating percents, which is the expression of a ratio where the denominator is 100, indicating parts per hundred.
For example, if an item costs $50 and is sold for $75, the markup is $25 ($75 - $50). To find the markup percentage, we divide $25 by the cost price ($50), which gives us 0.5, and then multiply by 100 to get a 50% markup percentage. This percentage calculation is fundamental to understanding how businesses set pricing strategies and determine their profit margins.