Fine Framings, a small framing shop, uses markup pricing to arrive at a final selling price. The firm sells its frames at a price of $25, given a $15 unit cost. Fine Framings' markup on the selling price is _____, and its markup on cost is _____.
A) 66 2/3 percent; 40 percent
B) 40 percent; 66 2/3 percent
C) 167 percent; 67 percent
D) 250 percent; 100 percent

Question

Quizplus · Accepted Answer

To calculate the markup on the selling price, we use the formula:
Markup on Selling Price = (Selling Price - Cost) / Selling Price
Here, Selling Price = $25 and cost = $15
So, Markup on Selling Price = (25 - 15) / 25 = 0.4 or 40%
To calculate the markup on cost, we use the formula:
Markup on Cost = (Selling Price - Cost) / Cost
Here, Selling Price = $25 and cost = $15
So, Markup on Cost = (25 - 15) / 15 = 1.67 or 167%
Therefore, the best choice is B, where the markup on the selling price is 40% and the markup on cost is 66 2/3%.

Fine Framings, a Small Framing Shop, Uses Markup Pricing to Arrive