Cost of an item given Selling Price of $75 and a 87.5% Markup on Cost

Given: Selling Price = $75,  Markup = 87.5%
Markup as a Decimal: 87.5% = 0.875
Formula:
Cost =  

Selling Price/ 1 + Markup as a Decimal

Cost =  

$75/ 1 + 0.875

Cost =  

$75/ 1.875

Cost = $40
Notes:
Markup Amount = Selling Price – Cost = $75 – $40 = $35
Profit = Markup Amount = $35
Profit Margin =  

Profit/ Selling Price

=  

$35/ $75

= 0.4667 = 46.67%