Assume markup is based on cost. Find the dollar markup and selling price for the following problem.
Required:
Note: Round your answers to the nearest cent.
| Item | Cost | Markup percent | Dollar markup | Selling price |
| --------------------- | --------- | -------------- | ------------- | ------------- |
| Burberry men's watch | $390 | 40 % | | |
Answer (1)
Calculate the dollar markup by multiplying the cost by the markup percentage: Do ll a r , ma r k u p = $390 × 0.40 = $156 .
Calculate the selling price by adding the dollar markup to the cost: S e ll in g , p r i ce = $390 + $156 = $546 .
The dollar markup is $156 .
The selling price is $546 .
Explanation
Understanding the Problem The problem provides the cost of a Burberry men's watch and the markup percentage based on cost. We need to find the dollar markup and the selling price.
Calculating the Dollar Markup First, we calculate the dollar markup. The markup percentage is 40%, which means the markup is 40% of the cost. The cost of the watch is 390. T o f in d t h e d o ll a r ma r k u p , w e m u lt i pl y t h ecos t b y t h e ma r k u pp erce n t a g e : Do ll a r , ma r k u p = C os t × M a r k u p p erce n t a g e Do ll a r , ma r k u p = $390 × 40% Do ll a r , ma r k u p = $390 × 0.40 Do ll a r , ma r k u p = $156 $
Calculating the Selling Price Next, we calculate the selling price. The selling price is the sum of the cost and the dollar markup: S e ll in g , p r i ce = C os t + Do ll a r , ma r k u p S e ll in g , p r i ce = $390 + $156 S e ll in g , p r i ce = $546
Final Answer Therefore, the dollar markup is $156 and the selling price is $546.
Examples
Understanding markup and selling price is crucial in retail. For example, if a store buys a shirt for $20 and marks it up by 50%, the dollar markup is $10, and the selling price is $30. This concept helps businesses determine the price at which they can sell goods to make a profit while remaining competitive in the market. By understanding these calculations, businesses can make informed decisions about pricing strategies, promotions, and overall profitability.
