A retailer marks up all cosmetic products to allow for overhead expenses of 30% of cost and operating profit of 40% of cost. If a product does not sell within two months, the product is marked down to its break-even price. What rate of markdown is the retailer using?
A) 40%
B) 23.5%
C) 30%
D) 70%
E) 50%

Question

Quizplus · Accepted Answer

The retailer marks up the product by 70% (30% + 40%) and then marks it down to its break-even price, which is 30% below the cost. So, the rate of markdown is 30% / 70% = 23.5%.

A Retailer Marks Up All Cosmetic Products to Allow for Overhead