Exercises 19–20 involve markup, the amount added to the dealer’s ...

Question

Exercises 19–20 involve markup, the amount added to the dealer’s cost of an item to arrive at the selling price of that item.

The selling price of a refrigerator is $1198. If the markup is 25% of the dealer’s cost, what is the dealer’s cost of the refrigerator?

Accepted Answer

Welcome back. I'm so glad you're here. We have this appliance store selling ovens for this great price of $207. And we're going to label that as the selling price. That's what you and I would have to pay if we walked through their door wanting that particular oven. But they had to buy it from somewhere else. They have a cost that they paid for it from some other supply chain company. And we're going to label that c. And it's actually what we're trying to solve for. We're trying to figure out, well what do they pay for it before they were able to sell it to us? And the other piece of information that we're given here is that the markup is 15%. The markup percentage is 15%. And we can also write that as a decimal or .15. But what is the markup? Well, the markup is the amount that they add to their cost so that they can arrive at the selling price and make a profit off of it. And that's actually pretty much the essence of the formula that we've got here. We take the original cost And then we're going to add the markup to it because the mark ups of 1%. We're going to multiply that percent times the original cost. That actually tells us how much the markup is in dollars and then together those two things will equal our selling price. Well now we've got our equation, we can just go back and fill in what we know, We don't know, see that's what we're trying to find. So C. Plus the market percentage will use the decimal 0.15 times C. Equals and our selling price is $207. Well we've got some like terms here this first, see that's a one C. So one C plus 10.15 C. Is 1.15 C equals 207. And now we can divide both sides by 1.15 to get the sea by itself. And when you do that, division c equals $180. And we want to pause for a second and ask ourselves, does this answer make sense? Does it make sense that their cost is going to be $180 when they're selling it for 207. And yet it does because their cost is going to be less than what they're selling it for. So great. We can go with that answer and that matches answer choice. A well done. We'll catch you on the next one.

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