Problem 38

Question

Involve markup, the amount added to the dealer's cost of an item to arrive at the selling price of that item. The selling price of a scientific calculator is \(\$ 15 .\) If the markup is \(25 \%\) of the dealer's cost, what is the dealer's cost of the calculator?

Step-by-Step Solution

Verified
Answer
The dealer's cost for the calculator is \$12.
1Step 1: Understanding the markup formula
The markup formula is: \(Selling\:Price = Dealer's\:Cost + Markup\). Since the markup is 25% of the dealer's cost, we substitute that into the formula: \(Selling\:Price = Dealer's\:Cost + 0.25 * Dealer's\:Cost\) or \(Selling\:Price = 1.25 * Dealer's\:Cost\)
2Step 2: Solve for Dealer's Cost
To find the dealer's cost, we need to rearrange the formula to isolate 'Dealer's Cost' on one side of the equation. The equation becomes: \(Dealer's\:Cost = Selling\:Price / 1.25\)
3Step 3: Substitute the given selling price
Substitute the given selling price \$15 into the formula: \(Dealer's\:Cost = 15 / 1.25\)
4Step 4: Calculate the cost
Perform the division to find the dealer's cost: \(Dealer's\:Cost = 12\)