Deck 9: Markup and Markdown

Question 1

Murry, a retailer, marks up hardware 28% on the selling price. If an electric saw costs $324.00, the selling price would be $414.72.

Answer 1

False

Question 2

If costs and expenses are greater than the markup, for a given period, the difference is called:

A) net loss
B) reduced price
C) markdown
D) gross margin

Answer 2

net loss

Question 3

A markup based on cost is generally used by retailers.

Answer 3

False

Question 4

Markup is also referred to as:

A) gross margin
B) gross profit
C) both gross profit and gross margin
D) price differential

Question 5

The cost of a fur coat, assuming a $311.50 markup, which is a 35% markup on selling price, is $202.48.

Question 6

A microwave was originally priced at $440.00. If it was subsequently reduced by 15%, the sales price would be $374.00.

Question 7

Tree-Mark Industries pays $90.00 for unfinished wood furniture and sells it at a markup of 35% o? cost. The selling price is $121.50.

Question 8

Markup represents the amount of the selling price needed to cover operating expenses an? overhead.

Question 9

By using a formula, the percent markup based on selling price can be converted to percent markup based on cost.

Question 10

When comparing markup based on cost to markup based on selling price:

A) none of these
B) all else being equal, markup based on cost will result in a higher markup rate
C) markup based on cost provides more profit for the business
D) when using markup based on selling price, cost can never be determined

Question 11

Cost is equal to markup plus selling price.

Question 12

If a product is marked up, the new price is called the reduced price.

Question 13

The amount a business gets to keep, after paying for all costs and expenses, is termed:

A) gross margin
B) gross profit
C) net loss
D) net profit

Question 14

If patio furniture costs $500.00 and sells for $550.00, the percent markup based on selling price is 10%.

Question 15

The selling price of merchandise minus the cost equals the markdown.

Question 16

Pat's Deli makes onion buns that cost $.48 each. 10 percent of the onion buns will spoil and be thrown away. Pat wants a 40 percent markup based on cost. Pat produces 800 onion buns. Each onion bun should sell for:

A) $0.86
B) $0.80
C) $0.75
D) $0.69

Question 17

The percent of markdown can be calculated by using the percentage formula which is:

A) rate equals portion divided by base
B) base equals portion divided by rate
C) portion equals rate divided by base
D) rate equals portion times base

Question 18

Markdowns are typically used:

A) all of these are appropriate uses of markdowns
B) when merchandise is priced too high to begin with
C) when merchandise goes out of style, or is seasonal
D) when pricing perishables

Question 19

Markdowns are usually the result of:

A) lack of seasonality
B) changes in style
C) absence of special promotions
D) absence of competition

Question 20

After finding the first selling price upon which a series of markup or markdowns will be based, all subsequent changes:

A) will result in a profit when using markups, and a loss using markdowns
B) will be based upon selling price
C) will be based on cost
D) will be based on either cost or selling price for markups, and selling price for markdowns

Question 21

The original selling price minus the sale price is called the:

A) gross margin
B) reduced price
C) markdown
D) markup

Question 22

A markdown percent can be calculated by dividing the amount of markdown by the sale price.

Question 23

When calculating a markup on cost,________ is always equal to 100%.

A) cost
B) margin
C) selling price
D) markup

Question 24

The actual cost can be calculated, if the selling price and the percent markup on selling price is known.

Question 25

A markdown is:

A) only based on selling price after a markup based on cost
B) always based on selling price
C) never based on selling price
D) based on either cost or selling price

Question 26

Cost is equal to 100% when markup is based on the cost.

Question 27

If the markup on a product is based on the selling price, then the selling price equals 100%.

Question 28

If the cost and the percent of markup on cost are known, the selling price can be calculated.

Question 29

Markup may be expressed as:

A) the difference between the selling price and the cost
B) all of these are appropriate expressions of markup
C) net profit
D) a percent

Question 30

A toaster that originally sold for $31.00 was marked down to $28.50. The percent markdown was 38.9%.

Question 31

The amount of markdown divided by the original selling price is the markdown percent.

Question 32

An item sells for $48.60 and is marked up 20% on selling price.The cost is $38.88.

Question 33

Which of the following would best represent a perishable?

A) art work
B) a new car
C) investment products
D) vegetables

Question 34

The percent markup on the selling price is equal to the amount of markup divided by the selling price.

Question 35

In the markup stage of a markup / markdown series, the original price is always used.

Question 36

The term of "new price" pertains to:

A) markdowns only after sale
B) markup only
C) both markup and markdown
D) markdown only

Question 37

Sunfresh Bakery makes Italian bread that costs $1.34 per loaf. Past experience shows that 8 percent of the loaves will spoil and have to be discarded. Assuming Sunfresh wants a 45 percent markup based on cost and produces 250 loaves, each loaf of bread should sell for:

A) $2.11
B) $2.95
C) $2.08
D) $1.94

Question 38

A series of markups or markdowns may be used to determine the final selling price.

Question 39

The price of an item on the retail market is called the:

A) margin price
B) markup price
C) markdown price
D) selling price

Question 40

To ascertain the cost of merchandise, take the selling price and subtract the markup.

Question 41

The difference between the markup and the selling price is the markdown.

Question 42

A markup rate of 35% based on sales price converts to a 45% markup rate based on cost.

Question 43

Cost is the base when markup is based on the selling price.

Question 44

When a fruit and vegetable stand marks up produce, the selling price assumes no spoilage will occur.

Question 45

Higgens buys toy trucks for $12.00 each and sells them for $16.00. The markup based on cost is 23.1%.

Question 46

When the original selling price of a product has been reduced, this is termed a markdown.

Question 47

The costs associated with running a business are called:

A) operating expenses
B) net costs
C) net loss
D) gross margin

Question 48

Manufacturers typically use a markup based on selling price.

Question 49

When calculating a markup based on cost, the sale price is always equal to 100%.

Question 50

A markdown represents a price increase from the original selling price.

Question 51

The amount by which the selling price of an item is reduced is referred to as the:

A) margin
B) cost
C) reduced price
D) markdown

Question 52

A radio is sold for $16.00.This represents a markup of 30% on cost. The cost of the radio is $44.80.

Question 53

Sales minus the cost of merchandise and operating expenses is known as the markdown.

Question 54

The percent markup on cost is equal to the dollar markup divided by the selling price.

Question 55

If you have a series of markdowns, each markdown is based on the original selling price.

Question 56

Cost plus markup is equal to the selling price.

Question 57

The percent of each markdown in a series of markdowns is based on the:

A) original selling price
B) marked up selling price
C) previous selling price
D) gross margin

Question 58

percent of the selling price by 1 plus the markup percent of the selling price.

Question 59

Gross profit includes:

A) markdown
B) both operating expenses and overhead
C) overhead
D) operating expenses

Question 60

Markup is sometimes referred to as net profit.

Question 61

If markup is based on selling price, the selling price times 1 minus the markup percent on the selling price will equal the cost.

Question 62

An item selling for $633 is marked down 25% for a special promotion. It is later marked down 20% of the sale price. What is the final selling price of the item?

A) $791.25
B) $379.80
C) $348.15
D) $588.00

Question 63

The Jewelry Store priced its entire stock of sterling silver at $1577. The original price was $2130. Find the percent of markdown on the original price.

A) 135%
B) 26%
C) 35%
D) 74%

Question 64

James Page works in a local music store where he sells guitars for $196.60 each. If he maintains a markup of 50.4% on selling price, what is the cost of a guitar to James?

A) $97.51
B) $295.69
C) $294.11
D) $99.09

Question 65

A local dealer sells baseballs for $25.00 each. If this is a 34.7% markup on selling price, find the equivalent markup percent on cost.

A) 25.8%
B) 34.7%
C) 46.9%
D) 53.1%

Question 66

In arriving at a markup on merchandise, most ________use the markup on cost method.

A) retailers
B) wholesalers
C) manufacturers
D) consumers

Question 67

A 17.9% markup based on cost is equivalent to what percent based on selling price (retail)?

A) 13.6%
B) 84.8%
C) 86.4%
D) 15.2%

Question 68

A DVD player that costs $168 sells for a 30% markup based on the cost. What is the selling price of the DVD player?

A) $560.00
B) $50.40
C) $129.23
D) $218.40

Question 69

A set of speakers that costs $91 sells for a 25% markup based on the cost. What is the markup of the speakers?

A) $364.00
B) $113.75
C) $72.80
D) $22.75

Question 70

The cost of a digital camera is $152. For a special year-end sale the price is marked down 20%. Find the selling price of the camera.

A) $126.67
B) $182.40
C) $30.40
D) $121.60

Question 71

The Sports Shoppe is buying baseball t-shirts. The cost of the shirts, which includes permission fees, will be $11.44 each if 1000 shirts are purchased. Jamie sells 800 shirts before the baseball season begins at a 50% markup based on cost. What is the gross margin (markup) if Jamie sells the remaining 200 shirts at a 25% reduction from the selling price?

A) $16,302
B) $11,154
C) $3575
D) $4862

Question 72

A local dealer sells baseballs for $25 each. If $6.23 is the cost, what is the percent of markup on the selling price?

A) 75.1%
B) 42.9%
C) 8.3%
D) 57.1%

Question 73

An item has a 8.2% markup based on selling price. What is the equivalent markup percent based on the cost?

A) 92.4%
B) 7.6%
C) 8.9%
D) 91.1%

Question 74

Original price $1489.00; markdown $163.79. Find the reduced price and the rate of the markdown.

A) Reduced (new) price = $163.79 Rate of markdown = 89%
C) Reduced (new) price = $1325.21 Rate of markdown = 89%

Question 75

An item is originally priced to sell for $55 and is marked down 20%. A customer has a coupon for an additional 40%. What is the total percent reduction for this item? Give the net decimal equivalent and total percent reduction.

A) 0.52; 48%
B) 0.6; 40%
C) 0.4; 60%
D) 0.48; 52%

Question 76

The markup on an external hard drive is $22. Find the cost of the hard drive if the markup is 20% of the cost.

A) $18.33
B) $110.00
C) $26.40
D) $4.40

Question 77

Reduced price = $22.21; markdown rate = 35%. Find the original price and the markdown amount.

A) Original price = $14.44
Markdown amount = $7.77
B) Original price = $34.17
Markdown amount = $11.96

Question 78

An item has a 41.1% markup based on selling price. What is the equivalent markup percent based on the cost?

A) 69.8%
B) 30.2%
C) 29.1%
D) 70.9%

Question 79

To find the cost of a product, you can use the formula markup plus selling price equals cost.

Question 80

A 60.0% markup based on cost is equivalent to what percent based on selling price (retail)?

A) 66.7%
B) 33.3%
C) 37.5%
D) 62.5%