Business FinancesQuestion 1179 of 1605
Which markup on cost produces a 20% gross margin?
a.25%
b.18%
c.30%
d.20%
Explanation
Markup = margin / (1 - margin) = 0.20 / 0.80 = 0.25 = 25%. Check with $100 cost: 25% markup gives $125 price; margin = $25 / $125 = 20%.
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