Consider the use of an incorrect markup base in Westerlund’s business. A markup
of 122.2 percent on her cost of goods sold for a typical frame she sells gives 122.2%
$36 $44 of markup. Added to the $36 cost of goods sold, this gives her a selling
price of $80 for the framed picture. However, a new clerk working for her who erroneously
prices the framed picture at 55 percent of cost of goods sold sets the final price
at $55.80 ($36 of cost of goods sold plus 55% $36 $19.80). The error, if repeated,
could be disastrous: frames would be accidentally sold at $55.80, or $24.20 below the
intended selling price of $80.