Question

4. The owner of a sporting goods store has decided on a 250 percent

markup on all apparel. How much will the store charge for bicycle

shorts it purchased from the wholesaler for $10 each? What did the

store pay for running shoes that it is selling for $70? (LO 8.2-2)

Answer 1

To find the price the store will charge for the bicycle shorts, multiply the cost by the 250% markup. To determine the cost of the running shoes, divide the selling price by (1 + the markup percentage).

Step-by-step explanation:

To find the price the store will charge for the bicycle shorts, we need to apply a 250 percent markup to the cost. The markup is calculated by multiplying the cost by the markup percentage and adding it to the cost. So, the store will charge $10 + ($10 × 250%) = $10 + ($10 × 2.5) = $10 + $25 = $35 for the bicycle shorts.

To determine the cost of the running shoes that the store is selling for $70, we can use the concept of a reverse markup. A reverse markup is calculated by dividing the selling price by (1 + the markup percentage). So, for the running shoes, the cost would be $70 / (1 + 250%) = $70 / (1 + 2.5) = $70 / 3.5 = $20.

Answer 2

Part A. Profit Markup $25 per unit

Part B. Profit Markup $50 per unit

Step-by-step explanation:

Always remember that while calculating Markup, the cost is always deemed 100%. This means

Sales = Cost + Markup

120% = 100% + 20%

Mathematically,

Markup = Cost * %age we want that is Markup %age / %age we are standing at

Part A. As we know that the cost of the product is $10 which 100% and the Markup percentage is 250% in the question.

By putting values, we have:

Markup = $10 * 250% / 100% = $25 per unit

Part B. The company under the markup system, would pay the cost which is always 100%.

So here, selling price is given which is $70 which includes 100% and 250% profit markup. This means $70 is 350% (100% Cost + 250% Profit Markup).

Mathematically,

Profit Markup = Sales * Markup %age (%age we want) / %age we are at

Sales is 350%, so we are at 350%

Profit Markup = $70 * 250% / 350% = $50 per unit