The cost of a coat is $80. If the retailer wants a rate of mark-up on selling price of 40%, what is the amount of mark-up on cost?
A) $32
B) $120
C) $53.33
D) $150
E) $50

Question

Quizplus · Accepted Answer

The mark-up on selling price of 40% means the selling price is 140% of the cost price. So, the selling price = $80 * (140/100) = $112. The amount of mark-up on cost = Selling price - Cost price = $112 - $80 = $32. However, the question asks for the mark-up on cost, which is calculated differently. Given a 40% mark-up on the selling price, we work backwards to find the mark-up amount on cost. The selling price represents 100%, and the mark-up is 40% of this selling price, not the cost. To find the mark-up on cost, we need to adjust our calculation. The correct calculation involves finding the cost as a percentage of the selling price, which is not directly provided in the options, indicating a misunderstanding in the explanation. The correct approach to find the mark-up on cost when given a mark-up rate on selling price is to use the formula: Mark-up = Selling Price - Cost Price. However, to find the selling price from a mark-up percentage on it, we use the formula: Selling Price = Cost Price / (1 - Mark-up Rate). Here, the mark-up rate should be converted to decimal form for the calculation. Given a 40% mark-up on the selling price, the calculation provided does not directly lead to the correct answer due to a mix-up in the explanation process. The correct method to find the mark-up amount on cost based on a mark-up on selling price involves understanding that the selling price includes the cost plus the mark-up. With a 40% mark-up on the selling price, we aim to find how much above the cost this mark-up represents, which requires a different calculation approach than initially explained.

The Cost of a Coat Is $80