If a retailer can sell an item for $6 and needs a 40 percent markup on retail to meet profit objectives,that retailer should pay no more than _____ for the item.
A) $2.40
B) $3.60
C) $6.40
D) $8.40
E) $9.60

Question

Quizplus · Accepted Answer

If the retailer sells an item for $6 and needs a 40% markup on retail, then their cost for the item can be calculated as:

Cost = Selling Price / (1 + Markup Percentage)
Cost = $6 / (1 + 0.40)
Cost = $6 / 1.40
Cost = $4.29 (rounded to the nearest cent)

Therefore, the retailer should pay no more than $4.29 for the item. Among the answer choices, the only option that is less than $4.29 is B ($3.60), so that is the correct solution.

If a Retailer Can Sell an Item for $6 and Needs