Question

Misu Sheet, owner of the Bedspread Shop, knows his customers will pay no more than $150 for a comforter. Misu Sheet wants to advertise the comforter as "percent markup on cost." What is the equivalent rate of percent markup on cost compared to the 20% markup on selling price?

Answer 1

Answer with Explanation:

As we know that:

Selling Price = Cost + Markup

And using markup on cost, the cost is always 100%

So

Selling price %age = 100% + 20% = 120%

So

Cost 100% = $150 * 100% / 120% = $125

But when percent markup on selling price is used, then the selling price is always 100% which is equal to $125.

So

Selling price 100% = Cost 80% + Markup 20%

$125 = Cost 80% + ($150-$125)

$125 - $25 = Cost

Cost = $100

Equivalent rate of percent markup on cost will be:

Equivalent rate of percent markup on cost = $50 / $100 = 50%

The answer is 50%.