You know that ...
... total cost = (marked-up price) + 6.25% × (marked-up price)
... $90.10 = (marked-up price) × 1.0625
Solving for (marked-up price) gives
... marked-up price = $90.10/1.0625 = $84.80
<u>Markup</u>
You also know that
... marked-up price = cost + markup
... $84.80 = $50.88 + markup
... $33.92 = markup . . . . . . . . . . . subtract $50.88
The percentage of markup can be figured a couple of different ways. It is easy to add a percentage to the cost price of an article, because the cost is generally right in front of the storekeeper when the article is received and prices are being marked. However, many accountants are interested in the percentage of the selling price that is available for overhead and profit, so they are interested in the markup as a percentage of selling price. The question here is non-specific as to the base to be used for figuring the percentage of markup.
The markup as a percentage of cost is
... $33.92/$50.88 × 100% = 66.67%
The markup as a percentage of selling price is
... $33.92/$84.80 × 100% = 40%
