Chapter 9 Markup and Markdown

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Markup and Markdown

Find the cost, markup or selling price
when any two of the three are known.

Find the percent of markup based on the
cost when the cost and selling price are
known.

Find the selling price when the cost and
percent of markup based on the cost are
known.
(continued)
Business Math, Eighth Edition
Cleaves/Hobbs
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Markup and Markdown
(continued)

Find the cost when the amount of markup
and the percent of markup based on the
cost are known.

Find the cost when the selling price and the
percent of markup based on the cost are
known.
Business Math, Eighth Edition
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07458 All Rights Reserved
Markup =
Selling price – Cost
Cost
Selling price - Markup
Business Math, Eighth Edition
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=
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07458 All Rights Reserved
Try these examples
If an item sells for $20 and has a markup of
$12, what is the cost of the item?
Answer: $8
If an item costs $16 and is sold for $20, what is
the markup of that item?
Answer: $4
Business Math, Eighth Edition
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© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Find the percent of markup based on the cost
when the cost and selling price are known
When the markup is based on cost
The rate of cost is always 100%
Business Math, Eighth Edition
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07458 All Rights Reserved

A retailer can buy a shirt from a wholesaler at
$10.00.
The retailer will add $5.00 to the cost.

The retailer then sells it for $15.00.

Business Math, Eighth Edition
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P=RxB
Using the formula
Markup = rate of markup x cost
Change the equation so the rate of markup
is equal to markup divided by the cost.
Business Math, Eighth Edition
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07458 All Rights Reserved
Rate of markup based on cost
The shirt
Business Math, Eighth Edition
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Cost
$10
Rate of
cost
100%
+Markup
$5
+ Rate of
markup
?
=Selling
price
$15
= Rate of
Selling
price
?
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Five Step Solution Plan
1. What you know…
Rate of cost always equals 100%; MU and C values.
2. What you are looking for?
Rate of markup and rate of selling price
3. Solution plan
Rate of markup = MU divided by cost
4. Solution
Carry out operation
5. Conclusion
Add rate of MU to C to find rate of SP. Does it make sense?
Business Math, Eighth Edition
Cleaves/Hobbs
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Substitute the known values


A shirt that costs $10 and sells for $15 has a
markup rate of 50%
$5 divided by $10 is equal to .5 or 50%
Rate of markup [based on cost] is equal to
50%
Business Math, Eighth Edition
Cleaves/Hobbs
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Try these examples
1.
2.
Duke’s photography pays $9 for a 5x7
photograph. If the photograph is sold for $15,
what is the percent of markup based on cost?
Answer: 66.67%
Lilly buys tea from England for $4 a box and
sells it in “The Tea Party” for $12 a box. Find
the percent of markup based on cost.
Answer: 200%
Business Math, Eighth Edition
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07458 All Rights Reserved
Find the selling price when the cost and percent of
markup based on the cost are known
A boutique pays $5 a pair for handmade
earrings and sells them at a 50% markup
based on cost. Find the selling price of
the earrings.
Cost
+Mark-up
=Selling price
Business Math, Eighth Edition
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$5
Rate of Cost
100%
? Rate of markup +50%
?
Rate of SP
=150%
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Find the selling price

The rate of the selling price is found by
adding the rate of cost (100%) to the rate of
markup.

Selling price = Rate of selling price
(based on cost) x cost
Business Math, Eighth Edition
Cleaves/Hobbs
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Do these examples

What is the selling price for a CD which costs
the retailer $8.00 and is marked up 60% based
on cost?
Answer: $12.80

What is the selling price for a set of
hairbrushes which cost the salon $12.00 and is
marked up 150% based on cost?
Answer: $30
Business Math, Eighth Edition
Cleaves/Hobbs
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Find the cost when the amount and the
percent of markup are known
A DVD movie is marked up $6.50 which
represents a 40% markup based on cost.
What is the cost of the DVD?
Cost
?
RC
+MU 6.50 +RMU
= SP
Business Math, Eighth Edition
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?
100%
40%
= RSP 140%
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07458 All Rights Reserved
Find the cost by dividing the markup
amount by the markup rate

Cost = Markup
Markup rate

Cost =

Cost = $16.25
Business Math, Eighth Edition
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$6.50
40% [or 0.4]
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Try these two examples

Find the cost of a box of ballpoint pens which
has been marked up $4 and has a markup rate
of 30%.
Answer: $13.33

Find the cost of a pair of shoes that has been
marked up $25 and has a markup rate of 50%.
Answer: $50
Business Math, Eighth Edition
Cleaves/Hobbs
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Find the cost when the selling price and the
percent of markup based on cost are known
A camera sells for $20. The markup rate
is 50% of the cost. Find the cost of the
camera and the markup.
Cost
?
RC
100%
+Markup
?
+RMU
50%
= Selling price
$20
= RSP
150%
Business Math, Eighth Edition
Cleaves/Hobbs
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Find the cost by dividing the selling price
by the rate of the selling price

Cost =
Selling price
Rate of the selling price

Cost =
$ 20
150% (or 1.5)

Cost = $13.33
Business Math, Eighth Edition
Cleaves/Hobbs
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Try these examples

Find the cost and markup of a bicycle
tire which sells for $18 and is marked
up 50% of the cost.
Answer: $12 and $6

Find the cost and markup of a
moisturizing cream which sells for $30
and is marked up 150% of the cost.
Answer: $12 and $18
Business Math, Eighth Edition
Cleaves/Hobbs
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
9.2 Markup based on selling
price and markup comparisons

Find the amount of markup and the percent
of markup based on selling price when the
cost and selling price are known.

Find the selling price when the amount of
markup and the percent of markup based on
selling price are known.
(continued)
Business Math, Eighth Edition
Cleaves/Hobbs
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
9.2 Markup based on selling price
and markup comparisons
(continued)

Find the selling price when the cost and the
percent of markup based on the selling price
are known.

Find the cost when the selling price and the
percent of markup based on the selling price
are known.

Compare the markup based on cost with the
markup based on selling price.
Business Math, Eighth Edition
Cleaves/Hobbs
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Take note!

In the previous section, the markup based
on cost, the rate of cost was always 100%.

In this section, the markup based on selling
price, the rate of selling price is always
100%.
Business Math, Eighth Edition
Cleaves/Hobbs
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Find the amount of markup
and the percent of markup
A calculator costs $5 and sells for $10.
Find the rate of markup based on the
selling price.
Cost
$5
Rate of Cost
?
+Markup
?
+Rate of
Markup
= Rate of
Selling price
?
= Selling price $10
Business Math, Eighth Edition
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100%
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Find the rate of markup by dividing the markup
by the selling price and multiplying it by 100%

The markup amount is the difference
between the selling price and the cost.

Divide the markup by the selling price to get
the difference and then multiply it by 100%,
to get the rate of markup.
Business Math, Eighth Edition
Cleaves/Hobbs
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Find the amount of markup and the percent of
markup (based on SP ) for the following items:

A dog collar which costs $4 and sells for
$10.
Answer: $6 and 60%

A notebook which costs $1.25 and sells for
$2.
Answer: $.75 and 37.5%
Business Math, Eighth Edition
Cleaves/Hobbs
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Find the selling price when the amount
of markup and the percent of markup
based on the selling price are known

Subtract the percent of markup from 100% to
obtain the rate of cost.

Divide the markup by the rate of markup based
on SP
Business Math, Eighth Edition
Cleaves/Hobbs
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Find the cost and selling price
if a handbag is marked up $5 with a
20% markup rate based on selling price
Business Math, Eighth Edition
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Cost
?
RC
?
+ MU
$5
+RMU
20%
= SP
?
= RSP 100 %
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Find the selling price and
the amount of the markup

SP = Markup
Rate of Markup based on selling price

SP = $5
20% or [0.2]

SP = $ 25
Business Math, Eighth Edition
Cleaves/Hobbs
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Find the selling price and
amount of markup based on
selling price for the following items:

A cell phone which has been marked up $50
and with a markup rate of 33% based on selling
price.
Answer: $150

A pair of socks which has been marked up $3
and with a markup rate of 60% based on selling
price.
Answer: $5
Business Math, Eighth Edition
Cleaves/Hobbs
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Find the selling price when the
cost and the percent of markup
based on selling price are known

Subtract the rate of markup from 100% to
determine the rate of cost.

Selling price = Cost [divided by]
Rate of Cost based on SP
Business Math, Eighth Edition
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© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Find the selling price and markup for
a pair of jeans which costs the retailer $28
What is the selling price?
Cost
$28
RC
?
+ MU
?
+ RMU
30%
= SP
?
= RSP
100%
Business Math, Eighth Edition
Cleaves/Hobbs
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
To find the selling price,
divide the cost by the rate of cost

SP = Cost
Rate of cost

SP = $28
70% [ = 0.7]

SP = $40
Business Math, Eighth Edition
Cleaves/Hobbs
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Find the selling price and markup (based
on selling price) for the following items:
A handheld calculator that costs the retailer $2
and is marked up 60%.
Answer: $5 and $3
A box of gourmet chocolates that costs $8 a box
and is marked up 75%.
Answer: $32 and $24
Business Math, Eighth Edition
Cleaves/Hobbs
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Find the cost when the selling
price and percent of markup
based on selling price are known
Subtract the rate of markup from the rate
of selling price to determine the rate of
cost.
Cost = Rate of Cost x Selling Price
Business Math, Eighth Edition
Cleaves/Hobbs
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Find the markup and cost of a box of pencils that sells
for $2.99 and marked up 25% of the selling price
First, find the rate of cost.
Cost
?
RC
?
+ MU
?
+RMU
25%
= SP
$2.99
= RSP
100%
Business Math, Eighth Edition
Cleaves/Hobbs
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Compare the markup based on cost
with markup based on selling price
Find the markup based on cost and the
markup based on selling of a computer that
costs $1,500 and sells for $2,000.
Cost 1500
+MU
500
RC
+R
MU
= SP 2000 =RSP
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100%
Cost 1500
?
+MU
?
=SP
RC
?
500
+R
?
MU
2000 =RSP 100%
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
What is the difference?

The percentage of markup based on cost is
33.33%.

The percentage of markup based on selling
price is 25%.

What accounts for the difference?
Business Math, Eighth Edition
Cleaves/Hobbs
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Converting a markup based on
selling price to a markup based on cost
The markup rate based on cost is
equal to the markup rate based on
selling price divided by 100% minus
the markup rate based on selling
price.
Business Math, Eighth Edition
Cleaves/Hobbs
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Converting a markup
based on cost, to a markup
based on selling price
The markup rate based on selling price is
equal to the markup rate based on cost
divided by the markup rate based on cost
plus 100%.
Business Math, Eighth Edition
Cleaves/Hobbs
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
9.3 Markdown, Series of
Markdowns and Perishables

Find the amount of markdown, the reduced
(new) price, and the percent of the
markdown.

Find the final selling price for a series of
markup and markdowns.

Find the selling price for a desired profit on
perishable and seasonal goods.
Business Math, Eighth Edition
Cleaves/Hobbs
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Find the amount of markdown,
the reduced (new) price and
the percent of the markdown
The original selling price
is always 100%
Business Math, Eighth Edition
Cleaves/Hobbs
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Find the markdown and
rate of markdown

The markdown is found by subtracting the new
price from the original price.

The markdown rate is found by dividing the
markdown by the original price and multiplying
that figure by 100%.
Business Math, Eighth Edition
Cleaves/Hobbs
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
A lamp originally sold for $36 and is
marked down to sell for $30. Find the
markdown and rate of markdown.
$
%
Original Selling
Price (S)
$36
100%
-Markdown
= New Price
$6
$30
?
?
Business Math, Eighth Edition
Cleaves/Hobbs
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Find the final selling price for a series
of markup and markdowns

Each new price becomes the base.

For markups based on cost, multiply the base
by 1 + the rate of markup.

For markdowns, multiply the base by the
complement of the rate of markdown.
Business Math, Eighth Edition
Cleaves/Hobbs
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Find the final selling price
Find the final price for an item that cost
$18, marked up by 20% and then, was
marked down 33%, and subsequently
marked up 10% and finally marked down
by 50% for clearance.
Answer: $7.91
Business Math, Eighth Edition
Cleaves/Hobbs
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Find the selling price for a desired
profit on perishable and seasonal goods

Determine the cost by multiplying the unit price
by the quantity.

Determine the markup rate and amount and
add to the cost.

Establish the expected to sell amount.

Divide the total selling price by the expected to
sell amount.
Business Math, Eighth Edition
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© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved
Find the per pound selling price






Mr. Green buys 100 pounds of tomatoes at $.15
lb. and establishes a markup rate of 120%
based on cost. What is the total cost?
TC = $15 + MU=$18 =Total SP =$33
He expects to sell 90%. How many pounds is
he expected to sell?
Expected to sell = 90
Divide the TSP by “expected to sell” number.
SP = $0.37 lb. (rounded)
Business Math, Eighth Edition
Cleaves/Hobbs
© 2009 Pearson Education, Inc. Upper Saddle River, NJ
07458 All Rights Reserved

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