Multiple choice

A Company wishes to earn 20% profit margin on selling price. Which of the following is the profit mark up on cost, which will achieve the required profit margin?

  1. 33%

  2. 25%

  3. 20%

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Let selling price = 100. 20% profit margin means profit = 20, so cost = 80. Profit markup on cost = 20/80 = 0.25 = 25%. To achieve a 20% margin on selling price, you need a 25% markup on cost. Option B is correct.

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