Mark up -The practice of adding a constant percentage to the cost price of product to arrive at its selling price.
markup is added onto the total cost in order to create a profit.
Markup price = Unit cost / (1 –Desired return on sales)
Q. From the previous question. Now suppose that company wants to earn a 20 percent markup on sales. Calculate markup price.
Markup price = $ 17.5 / ( 1 – 20/100) = 17.5 / 0.8 = $ 22