Cost of an item given Selling Price of $12,250 and a 40% Markup on Cost

Given: Selling Price = $12,250,  Markup = 40%
Markup as a Decimal: 40% = 0.4
Formula:
Cost =  

Selling Price/ 1 + Markup as a Decimal

Cost =  

$12,250/ 1 + 0.4

Cost =  

$12,250/ 1.4

Cost = $8,750
Notes:
Markup Amount = Selling Price – Cost = $12,250 – $8,750 = $3,500
Profit = Markup Amount = $3,500
Profit Margin =  

Profit/ Selling Price

=  

$3,500/ $12,250

= 0.2857 = 28.57%