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MacAllister Company charges cost plus 35%. Suppose the price of an item is $90. What is the item's cost?
a $50.00
b $62.50
c $66.67
d $80.00

Answer :

The cost of an item sold at $90 with a markup of 35% is calculated by dividing the selling price by 1 plus the markup percentage expressed as a decimal, resulting in $66.67.Thus, the correct option is c).

About finding the original cost of an item when given its final selling price that includes a percentage markup from MacAllister Company. To solve for the item's cost, when the item is sold at $90 including a 35% markup, you need to use the formula for calculating the original cost before markup:

price = cost + (cost imes markup percentage)

From the given information:

  • Price (final selling price) = $90
  • Markup percentage = 35% or 0.35 in decimal form

To find the cost, you can rearrange the formula to solve for 'cost':

cost = price / (1 + markup percentage)

So it becomes:

cost = $90 / (1 + 0.35) = $90 / 1.35 = $66.67

Therefore, the item's original cost is $66.67, which matches option c.

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Rewritten by : Jeany

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