Fine Framings, a Small Framing Shop, Uses Markup Pricing to Arrive

question 56

Multiple Choice

Fine Framings, a small framing shop, uses markup pricing to arrive at a final selling price. The firm sells its frames at a price of $25, given a $15 unit cost. Fine Framings' markup on the selling price is _____, and its markup on cost is _____.

• A) 66 2/3 percent; 40 percent
• B) 40 percent; 66 2/3 percent
• C) 167 percent; 67 percent
• D) 250 percent; 100 percent

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Definitions:

Residual Income

The income that an individual or business has after all expenses and costs, including capital costs, have been subtracted.

Investment Opportunity

A potential financial venture, project, or mechanism expected to yield returns or benefits.

Required Rate of Return

The minimum yearly return percentage required to attract individual or corporate investors to a specific security or project.

Operations

Pertains to the daily operations conducted in managing a business to create value for its stakeholders.