Cost of an item given Selling Price of $8 and a 25% Markup on Cost

Given: Selling Price = $8,  Markup = 25%
Markup as a Decimal: 25% = 0.25
Formula:
Cost =  

Selling Price/ 1 + Markup as a Decimal

Cost =  

$8/ 1 + 0.25

Cost =  

$8/ 1.25

Cost = $6.40
Notes:
Markup Amount = Selling Price – Cost = $8 – $6.40 = $1.60
Profit = Markup Amount = $1.60
Profit Margin =  

Profit/ Selling Price

=  

$1.60/ $8

= 0.2 = 20%