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QuestionA merchant sells an item for \$139.95 after a discount.
a) Find the regular selling price. b) Calculate the markup rate based on the regular price. c) What is the markup amount?

Studdy Solution

STEP 1

Assumptions1. The markup amount is 40.Themarkuppercentageis36.540. The markup percentage is36.5% of the cost price3. The overhead expenses are16.5% of the regular selling price4. The promotional sale price is 139.95

STEP 2

First, we need to find the cost price of the item. We can do this by dividing the markup amount by the markup percentage.
Cost price=Markup amountMarkup percentageCost\, price = \frac{Markup\, amount}{Markup\, percentage}

STEP 3

Now, plug in the given values for the markup amount and markup percentage to calculate the cost price.
Cost price=$4036.5%Cost\, price = \frac{\$40}{36.5\%}

STEP 4

Convert the percentage to a decimal value.
36.%=0.36536.\% =0.365Cost price=$400.365Cost\, price = \frac{\$40}{0.365}

STEP 5

Calculate the cost price.
Cost price=$400.365=$109.59Cost\, price = \frac{\$40}{0.365} = \$109.59

STEP 6

Now that we have the cost price, we can find the regular selling price. This includes both the cost price and the markup.
Regular selling price=Cost price+Markup amountRegular\, selling\, price = Cost\, price + Markup\, amount

STEP 7

Plug in the values for the cost price and the markup amount to calculate the regular selling price.
Regular selling price=$109.59+$40Regular\, selling\, price = \$109.59 + \$40

STEP 8

Calculate the regular selling price.
Regular selling price=$109.59+$40=$149.59Regular\, selling\, price = \$109.59 + \$40 = \$149.59

STEP 9

Now that we have the regular selling price, we can calculate the rate of markup based on the regular selling price. This is given by the ratio of the markup amount to the regular selling price.
Markup rate=Markup amountRegular selling priceMarkup\, rate = \frac{Markup\, amount}{Regular\, selling\, price}

STEP 10

Plug in the values for the markup amount and the regular selling price to calculate the markup rate.
Markup rate=$40$149.59Markup\, rate = \frac{\$40}{\$149.59}

STEP 11

Calculate the markup rate.
Markup rate=$40$149.59=0.267Markup\, rate = \frac{\$40}{\$149.59} =0.267Converting this to a percentage gives a markup rate of26.7%.
a) The regular selling price is $149.59. b) The rate of markup based on the regular selling price is26.7%.

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