Judy and Dale want to calculate the selling price (on COST) of an item that has a cost of $10.00 and a markup percent on cost of 40%. What is their selling price?
A. $16.67
B. $10.00
C. $10.50
D. $12.00
E. $14.00
Answer: (E) The key to remember is that this calculation is being performed on COST, not retail price. (A), $16.67, is incorrect; this would be the answer if the question had asked for a 40% markup on retail price. (B) cannot be correct because it is at cost. (C) is not correct because Selling Price = Cost + Markup. So SP = $10.00 = .4($10), or $14.00. (D) is also an incorrect answer.