Question

Payton Sanchez runs a popcorn stand in the local amusement park. Her cost to produce a bag of popcorn is $0.40, which she sells for $1.90.

1) What is Payton’s markup percentage on a bag of popcorn? (Round answer to 0 decimal places, e.g. 25%.)
2) If Payton wants to earn a 525% markup on a bag of popcorn, what price must she charge? (Round answer to 2 decimal places, e.g. 0.38.)

3) If Payton lowers her price per bag to $1.54, what markup percentage will she earn on a bag of popcorn? (Round answer to 0 decimal places, e.g. 25%.)

Answer 1

Markup Percentage is calculated as follows-

(Price - Cost)×100/Cost

By applying this formula we can derive the solutions to above problems.

1) What is Payton's Markup on a bag of popcorn?

= (1.90 - 0.40)×100/0.40

Markup = 375%

2) If Payton wants to earn 525% markup, what will be the price charged by her?

Lets assume Price be 'a'

525 = (a - 0.40)×100/0.4

5.25×0.4 = (a - 0.40)

a = 2.1 + 0.40 =$ 2.5 per bag

Price to be charged is $2.50

3) If price charged is $1.54, then what will be the markup?

= (1.54 - 0.40)×100/0.40

Markup = 285%