Question

A company wishes to earn a 20%of profit margin on selling price. which of the following mark up on cost,which will acheive the required profit margin ? ​

Answer 1

Given:

Profit margin = 20% on SP

To find:

Mark up price on the cost

Solution:

Let the selling price of the unit be = 100/-

Profit margin on SP = 20% = 20 /-

Therefore,

Cost per unit = SP - Profit

= 100 - 20

= 80

Thus, the cost per unit is 80/-

As profit per unit is 20/-, then -

Profit Per unit on Cost will be

=20/80 × 100

= 100/4

= 25

Answer: The markup price required to achieve the profit margin is 25%