Cost Price, Sales Price, Mark-Up
Q: How do you find the cost price if the sales are $216,000 and the mark-up is 50%?
A: "Mark-up" literally means the amount you "mark up" the cost by (the amount you increase it by) to get to the selling price. The percentage (50%) is based on the cost - i.e. the profit (mark-up) is 50% of the cost price.
In an equation this simplifies to:
Mark-up (profit) / cost = 50/100 (50% of cost)
Selling price = cost + profit (mark-up)
Selling price = 100%+50%
Selling price = 150%
Therefore cost = 100/150 X $216,000 = $144,000
Hope that helps understand the differences between cost price, sales price and mark-up.
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