Question

Error Analysis A store is instructed by corporate headquarters to put a markup of 43% on all

items. An item costing $7 is displayed by the store manager at a selling price of $3. As an
employee, you notice that this selling price is incorrect. Find the correct selling price. What was the
manager's likely error?
The correct selling price is $0 (Round to the nearest dollar as needed.)

Answer 1

$10

Explanation:

To calculate markup, you take you cost and then multiply it by the markup percentage (in decimal form), then add that number to the original cost. So the formula will look like this.

Selling Price = Cost + (Cost X Markup Percentage)

Let's use X to be the selling price you are looking for.

X = $7 + ( $7 x 0.43) 0.43 is the decimal value of 43 percent

Work on the numbers in parentheses first:

$7 x 0.43 = $ 3.01

now add that to the original cost:

$7 + $ 3.01 = $ 10.01

Round to the nearest dollar and you have $10.

The manager made the mistake of multiplying the markup percentage and the original cost.

$7 x 0.43 = $ 3.01

He subtracted the markup instead of adding it to the original cost.