Cost of an item given Selling Price of $240 and a 20% Markup on Cost

Given: Selling Price = $240,  Markup = 20%
Markup as a Decimal: 20% = 0.2
Formula:
Cost =  

Selling Price/ 1 + Markup as a Decimal

Cost =  

$240/ 1 + 0.2

Cost =  

$240/ 1.2

Cost = $200
Notes:
Markup Amount = Selling Price – Cost = $240 – $200 = $40
Profit = Markup Amount = $40
Profit Margin =  

Profit/ Selling Price

=  

$40/ $240

= 0.1667 = 16.67%