Johanna wants to start a new dance studio and needs to calculate the cost and selling price she should charge for lessons. Her accountant told her that the markup percent ON COST should be 15%, and that the amount of markup should be $17.00. What should her cost and selling price be?
A. cost = $100; selling price = $90
B. cost = $113.33; selling price = $130.33
C. cost = $113.33; selling price = $150
D. cost = $100; selling price = $19.55
E. cost = $13; selling price = $30
Answer: (B) This is a difficult question. However, the answer can be calculated as C = $113.33, while SP = $130.33. The formula to calculate cost and selling price is as follows: Markup % on Cost X Cost = Amount of Markup. Thus, .15 X Cost = $17. Since $17/.15 = $113.33, this is the cost. Because this is the cost, (A), (C), (D), and (E) cannot be correct. SP = Cost + Markup, so SP = $113.33 + .15($113.33) or SP = $113.33 + $17, which equals = $130.33.