A Retailer Marks Up All Cosmetic Products to Allow for Overhead

question 32

Multiple Choice

A retailer marks up all cosmetic products to allow for overhead expenses of 40% of cost and operating profit of 25% of cost. If a product does not sell within two months, the product is marked down to its break-even price. What rate of markdown is the retailer using?

• A) 25%
• B) 40%
• C) 15.2%
• D) 30%
• E) 65%

---

Definitions:

British Pounds

The currency of the United Kingdom, also known as sterling.

Euros

The official currency of the eurozone, which consists of 19 of the 27 European Union countries.

Risk-Free Rate

The expected return from an investment that carries no risk of financial loss, usually symbolized by government bonds.