How to Calculate Markup Percentage on Luxury Family Sedans

What is the markup percentage on each luxury family sedan sold by Patricia?

At Patricia’s car dealership, she sells luxury family sedans at a price of $50,000 each. The cars cost her $38,000 to purchase and she pays sales personnel a $2,000 commission for each car sold. What is her markup percentage on each car sold?

Answer:

Markup percentage on Patricia's luxury family sedans is 25%.

In order to calculate the markup percentage on each luxury family sedan sold by Patricia, we need to follow these steps:

Step 1: Calculate the Total Cost

To find the total cost of selling one car, we need to add the cost of purchasing the car and the commission paid to sales personnel:

Total Cost = Cost of Car + Commission Paid

Total Cost = $38,000 + $2,000

Total Cost = $40,000

Step 2: Calculate the Markup

Next, we calculate the markup on the car by subtracting the total cost from the selling price:

Markup = Selling Price - Total Cost

Markup = $50,000 - $40,000

Markup = $10,000

Step 3: Determine the Markup Percentage

Finally, we can calculate the markup percentage by dividing the markup by the total cost and multiplying by 100%:

Markup Percentage = (Markup / Total Cost) x 100%

Markup Percentage = ($10,000 / $40,000) x 100%

Markup Percentage = 25%

Therefore, Patricia's markup percentage on each luxury family sedan sold is 25%. This indicates that she is selling each car for 25% more than the total cost of selling it, which includes the purchase cost and the sales personnel commission.