What does markup represent in merchandising?

Markup represents the difference between the wholesale price and the intended sales price. This concept is fundamental in merchandising as it helps retailers determine how much they add to the cost of goods to ensure profitability. When a product is purchased from a supplier, it is acquired at a wholesale price. Retailers then set a sales price higher than this cost to cover expenses and generate profit, with the amount added being referred to as markup.

Understanding markup is crucial for calculating pricing strategies, managing inventory effectively, and determining potential profits. It allows businesses to ensure that they are not only recovering costs but also making a profit on their products. This metric is widely used in financial analysis within the retail sector to assess performance and set pricing accordingly.

While other options touch on relevant aspects of merchandising, they do not define markup accurately. Sales volume refers to overall sales activity, profit percentage addresses profitability in a different context, and item counts pertain to inventory management rather than pricing structure. Thus, option B best defines the relationship that markup captures within the retail environment.