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)

Part A. Profit Markup $25 per unit

Part B. Profit Markup $50 per unit

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