Jan and Bob Winfield want to calculate the cost of a new chair they just bought. Jan told Bob that the retail selling price of the chair was $1,000, and that the markup percent on the selling price was 60%. What would their cost be?
A. $1,000
B. $600
C. $625
D. $400
E. $150
Answer: (D) The cost would be $400. (A) is incorrect; the cost will not be equal to or in excess of the selling price. (B) is incorrect; $600 is 60% X $1,000. (C) is incorrect because this is the markup percentage on cost of 60%. (E) is incorrect because Cost = Selling Price - Markup (C = SP - M). Thus, 1,000 - 60%(1,000) = 400, and the cost of the product was $400.