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

Quizplus · Accepted Answer

Markup based on cost will result in a higher markup rate compared to markup based on selling price. For example, if the cost of a product is $10 and the desired markup is 50%, then the selling price would be $15 using a markup based on cost. However, with markup based on selling price, the selling price would have to be $20 to achieve the same 50% markup, resulting in a lower markup rate.

When Comparing Markup Based on Cost to Markup Based on Selling