Question
A store is instructed by corporate headquarters to put a markup of 25% on all items. An item costing $16 is displayed by the store manager at a selling price of $4. As an employee, you notice that this selling price is incorrect. Find the correct selling price. What was the manager's likely error? The correct selling price is
Answers
GPT 3.5
$20.
To find the correct selling price, we first need to calculate the markup amount based on a 25% markup of the item costing $16.
Markup amount = Cost x Markup Percentage
Markup amount = $16 x 0.25
Markup amount = $4
The correct selling price would be the cost plus the markup amount:
Correct selling price = Cost + Markup amount
Correct selling price = $16 + $4
Correct selling price = $20
The manager's likely error was incorrectly subtracting the markup amount from the cost to determine the selling price, instead of adding the markup amount to the cost.
To find the correct selling price, we first need to calculate the markup amount based on a 25% markup of the item costing $16.
Markup amount = Cost x Markup Percentage
Markup amount = $16 x 0.25
Markup amount = $4
The correct selling price would be the cost plus the markup amount:
Correct selling price = Cost + Markup amount
Correct selling price = $16 + $4
Correct selling price = $20
The manager's likely error was incorrectly subtracting the markup amount from the cost to determine the selling price, instead of adding the markup amount to the cost.