Question

Brown Company purchases laptops for $385 each and sells each one for $550. If overhead expenses are 9% on the costper laptop,   

a) calculate the profit the company is receiving on each laptop.

b) calculate the rate of markup on the selling price for each laptop.

c) calculate the rate of markup on the cost for each laptop.

Use Markup Formulas:

Selling Price: S=C+M

Selling Price: S=C+E+P

Amount of Markup: M=E+P

Rate of Markup on Cost= M/C x 100%

Rate of Markup on Selling Price= M/S x 100%

Break-Even Price: BE=C+E

Answer 1

(a)

Given

Cost of laptop = 385$

Overhead Cost @ 9% on Cost of Laptop = 385*9% = 34.65$

Selling Price of Laptop = 550$

Therefore Profit = Selling Price - Cost - Overhead Cost = 550-385-34.65 = 130.35$

(b)

Amount of Mark Up = Profit + Overhead Cost = 130.35 + 34.65 = 165$

Rate of Mark Up on Selling Price = Mark Up/Selling Price *100 = 165/550*100 = 30%

(c)

Total Cost of each laptop = Cost of purchase = 385$

Rate of Mark Up on Cost Price = Mark Up/Cost Price *100 = 165/385*100 = 42.8571%