Working backwards from a marked up number

NYBalbowa

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Aug 9, 2012
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Hi, thanks for reading. I would appreciate help with the following:

Assume a markup percentage of 1.2%.

Customer price is $125, with the markup above already applied.

How can I calculate the base cost?
 
Hi, thanks for reading. I would appreciate help with the following:

Assume a markup percentage of 1.2%.

Customer price is $125, with the markup above already applied.

How can I calculate the base cost?

What is the formula relating base cost, mark-up percentage and customer price?

Please share your work with us, indicating exactly where you are stuck - so that we may know where to begin to help you.
 
Hi, thanks for reading. I would appreciate help with the following:

Assume a markup percentage of 1.2%.

Customer price is $125, with the markup above already applied.

How can I calculate the base cost?

I may be oversimplifying this....however, as I read your question, this is how I see it:

customer price = base cost + markup percentage

If we let x = the base cost, then the markup percentage, or 1.2% of the base cost, would be 0.012x

So,

customer price = x + 0.012x
125 = x + 0.012x

Solve that for x......

As I said, I may be oversimplifying, so I'll gladly listen to the opinions of others!
 
Okay, let's use $100 as the base cost. Applying a markup of 1.2% gives us a final price of $101.20

Now, assume we do not have access to the base cost. The data is restricted.

With only the final figure of $101.20 and knowledge of the fixed markup, 1.2%, how can we then calculate the base cost?

If we multiply $101.2 by .988 (my train of thought for inverse markup), we get a value other than an even $100. And, this gap will increase as the numbers were using go up.

Does that make sense?
 
Add 1 to the decimal form of the percent, and divide the marked-up price by the result.

EG:

If the sales-tax rate at a restaurant is 9.8%, and your total bill is $129.55, what is the sub-total?

Add 1 to the decimal form of the percent: 1 + 0.098 = 1.098

Divide the total by the result: 129.55/1.098 = 117.99

Tip your server based on $117.99


If you have experience in algebra, you could deduce the above from MrsPi's post. (Actually, you could just follow her instruction.)

What grade are you in?

Cheers :cool:
 
Last edited:
Mark-up amount = mark-up percentage/100 * selling price (customer price)

and

customer price = base-cost + mark-up amount

then

customer price * (1 - mark-up percentage/100) = base-cost

base-cost = 125 (1-1.2/100) = 125 * 0.988 = 123.50
 
Ah, perfect! Thanks all! This one stumped me a bit.

You may have already guessed that I'm out of school (and slightly knuckle-headed) :cool:.
 
Mark-up amount = mark-up percentage/100 * selling price (customer price)

and

customer price = base-cost + mark-up amount

then

customer price * (1 - mark-up percentage/100) = base-cost

base-cost = 125 (1-1.2/100) = 125 * 0.988 = 123.50

Thanks. See, the problem I get with this method is:

125 * .988 = 123.50
123.50 * 1.012 = 124.98 (short of 125 exactly, and over time, with many large invoices, there will be a noticeable variance)
 
Thanks. See, the problem I get with this method is:

125 * .988 = 123.50
123.50 * 1.012 = 124.98 (short of 125 exactly, and over time, with many large invoices, there will be a noticeable variance)

123.50 + 125 * 1.2/100 = 125

This is why asked you to give the definition of mark-up - according to your class-notes (or text-book).
 
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