Cost of an item given Selling Price of $50 and a 25% Markup on Cost

Given: Selling Price = $50,  Markup = 25%
Markup as a Decimal: 25% = 0.25
Formula:
Cost =  

Selling Price/ 1 + Markup as a Decimal

Cost =  

$50/ 1 + 0.25

Cost =  

$50/ 1.25

Cost = $40
Notes:
Markup Amount = Selling Price – Cost = $50 – $40 = $10
Profit = Markup Amount = $10
Profit Margin =  

Profit/ Selling Price

=  

$10/ $50

= 0.2 = 20%