When Markup Is Based on Cost

question 45

Multiple Choice

When markup is based on cost:

• A)Cost is the portion
• B)Markup is the rate
• C)Cost is equal to selling price
• D)Cost is 100%
• E)None of these

---

Definitions:

Percentage Markup

The increase in cost price expressed as a percentage of the cost.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including materials and labor.

Average Price

The mean amount of money paid for goods or services, calculated by dividing the total cost by the number of items bought.

Operating Ratios

Financial metrics that measure the efficiency and profitability of a company by comparing various expenses or costs to its total revenue.