Question

What is the selling price of a dining room set at Macy's? Assume actual cost is $800 and 52% markup on selling price.

I know the answer to this is $1,666.67

The thing I am having trouble understanding is what the percentages are going towards with the total sale. I understand that we have a 52% markup on selling price which means just that, but when solving the problem: $800/(1-.52) the bottom will be the 48% which I do not know what it goes towards. Sorry if this question is worded bad and confusing I just didnt know any other way to ask it. Thanks.

Answer 1

Cost per unit = $800

Mark up = 52% on selling price

Since selling price is not given and mark up is based on selling price, we can assume that selling price is $K per unit.

Mark up = 52% on selling price

= K x 52%

= 0.52K

Cost per unit + Mark up = Selling price

800 + 0.52K = K

K - 0.52K = 800

0.48K = 800

K = 800/0.48

K = $1,666.67

Hence, selling price = $1,666.67