Question

65, A drugstore sells a drug costing $85 for $112 and drug costing $175 for $238.
A, If the markup policy of the drugstore is assumed to be linear, write an equation that expresses retail price R in terms of cost C (wholesale price).
B, what does a store pay (to the nearest dollar) for a drug that retails for $185?

Answer 1

Assume the linear relationship
R = mC + b
where m and b are constants

112 = 85 m + b
238 = 175 m + b
126 = 90m
m = 1.40
b = -7
R = 1.40 C - 7

This is a linear relationship, but it means they will be selling under C < $5 drugs at a loss, or paying people to take them. This is unrealistic.

If R = 185, C = $137.14