1-1 Markups

1-2 Terminology Selling Price - The price retailers charge customers Cost - The price retailers pay to a manufacturer Markup, margin, or gross profit - The difference between the cost of bringing the goods into the store and the selling price Operating expenses or overhead - The regular expenses of doing business such as rent, wages, utilities, etc. Net profit or net income - The profit remaining after subtracting the cost of bringing the goods into the store and the operating expenses

1-3 Basic Selling Price Formula Selling price (S) = Cost (C) + Markup (M) $1,200 Computer $900 - Price paid to bring computer into store $300 - Dollars to cover expenses and profit

1-4 Markups Based on Cost (100%) Cost + Markup = Selling Price 100% 33% 133% Cost is 100% - the Base Dollar markup is the portion Percent markup on cost is the rate

1-5 Calculating Dollar Markup and Percent Markup on Cost Johnny buys Sunday’s newspaper for $1.00. He plans to sell them for $1.50. What is Johnny’s markup? What is his percent markup on cost? Dollar Markup = Selling Price - Cost $.50 = $ $1.00 Percent Markup on Cost = Dollar Markup Cost $.50 = 50% $1.00

1-6 Calculating Selling Price When You Know Cost and Percent Markup on Cost Ray’s Appliances bought a refrigerator for $150. To make desired profit, he needs a 60% markup on cost. What is Ray’s dollar markup? What is his selling price? S = C + M S = $ ($150) S = $150 + $90 S = $240 Dollar Markup

1-7 Calculating Cost When You Know Selling Price and Percent Markup on Cost Jane’s imported flower business sells floral arrangements for $35. To make her desired profit, Jane needs a 40% markup on cost. What do the flower arrangements cost Jane? What is the dollar markup? S = C + M $35 = C +.40(C) $35 = 1.40C 1.40 $25 = C M = S - C M = $35 - $25 M = $10

1-8 Markups Based on Selling Price (100%) Cost + Markup = Selling Price 75% 25% 100% Selling Price is 100% - the Base (B) Dollar ($) markup is the portion (P) Percent (%) markup on selling price is the rate (R)

1-9 Calculating Dollar Markup and Percent on Selling Price Johnny buys Sunday’s newspaper for $1.00. He plans to sell them for $1.50. What is Johnny’s markup? What is his percent markup on selling price? Dollar Markup = Selling Price - Cost $.50 = $ $1.00 Percent Markup on Selling Price = Dollar Markup Selling Price $.50 = 33% $1.50

1-10 Calculating Selling Price When You Know Cost and Percent Markup on Selling Price Ray’s Appliances bought a refrigerator for $150. To make desired profit, he needs a 60% markup on selling price. What is Ray’s selling price and dollar markup? M = S - C M = $375 - $150 M = $225 S = C + M S = $ (S) -.60s -.60S.40S = $ S = $375

1-11 Calculating Cost When You Know Selling Price and and Percent Markup on Selling Price Jane’s imported flower business sells floral arrangements for $35. To make her desired profit, Jane needs a 40% markup on selling price. What is the dollar markup? What do the flower arrangements cost Jane? S = C + M $35 = C +.40($35) $35 = C + $ $14 $21 = C Dollar Markup