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Key Terms
gross profit
maintained markup
Percentage Markup
In most business situations, the markup figure is
expressed as a percentage MU(%), rather than
a dollar figure MU($).
Most sellers compute markup based on retail
price rather than cost because:
the markup on retail sounds smaller
future markdowns are calculated on retail
profits are calculated on sales revenue
Chapter 27 n Pricing Math 7
SECTION 27.1 Calculating Prices
Automobiles 5-10%* (*note dealers make money on factor incentives and sale of accessories)
Clothing 100%
Markup percentages vary with the type of product and business. How
would you determine how much a microwave, whose retail price was
$159.99, cost when all you knew was the markup percentage based on
cost noted in the above table? What would be its cost in dollars?
Chapter 27 n Pricing Math 11
SECTION 27.1 Calculating Prices
Maintained Markup
Maintained Markup
continued
Subtract the cost from the sale price to
determine maintained markup (MM($)):
SP - C = MM($)
Divide the maintained markup in dollars
by the sale price to determine the
maintained percentage:
MM($) / SP = MM(%)
Slide 2 of 2 Chapter 27 n Pricing Math 17
27.1 ASSESSMENT
Thinking Critically
If a buyer wanted to buy goods that cost
$100 and the customary markup on retail
was 40 percent, what two methods could
the buyer use to calculate the retail price?
Explain.