A company operating a chain of retail provision stores invoices goods to the branches at cost plus a mark-up of 25%. What is the mark-up percentage on selli...
Question 1 Report
A company operating a chain of retail provision stores invoices goods to the branches at cost plus a mark-up of 25%. What is the mark-up percentage on selling price?
Answer Details
To find the mark-up percentage on selling price, we need to understand how cost and selling price are related.
When the company invoices goods to the branches at cost plus a mark-up of 25%, it means that the selling price is equal to the cost plus 25% of the cost.
For example, if the cost of a product is $100, the selling price would be $100 + (25% of $100) = $125.
Now, to calculate the mark-up percentage on selling price, we need to find out what percentage of the selling price is the mark-up.
Let's take the same example above. The selling price of the product is $125, and the cost of the product is $100. Therefore, the mark-up is $25 ($125 - $100).
To find out the mark-up percentage on selling price, we divide the mark-up by the selling price and multiply by 100.
So, (mark-up ÷ selling price) × 100 = (25 ÷ 125) × 100 = 20%
Therefore, the mark-up percentage on selling price is 20%.
Option C (20%) is the correct answer.
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