Respuesta :
The total markup from manufacturer's cost to consumer purchase price is $8.06 (A).
Markup is a pricing strategy by adding some percent of price to earn profit from the different between the purchasing or production cost with the selling price of a product.
From the case, we know that the manufacturer production cost is $6 per unit. The manufacturer then changed 25% profit to determine the product selling price. The manufacturing selling price is:
Manufacturing selling price = Production cost + (% profit x production cost)
Manufacturing selling price = $6 + (25% x $6)
Manufacturing selling price = $7.50
The wholesaler who purchased the product from the manufacturer will add 50% to its purchasing cost. The wholesaler selling price is:
Wholesaler selling price = purchasing cost + (% profit x purchasing cost)
Wholesaler selling price = $7.50 + (50% x $7.50)
Wholesaler selling price = $11.25
The retailer then purchased the product from the wholesaler and add another 25% to charge the product before selling it to the consumers. The retailer selling price is;
Retailer selling price = purchasing cost + (% profit x purchasing cost)
Retailer selling price = $11.25 + (25% x $11.25)
Retailer selling price = $14.06
The total markup in the product price from its production cost up to its retailer selling price is:
Total markup = Retailer selling price - Production cost
Total markup = $14.06 - $6.00
Total markup = $8.06
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