What happens if an item's cost is $75 and MSRP is $140?

To determine the markup in dollars and the markup percentage for the item with a cost of $75 and a Manufacturer’s Suggested Retail Price (MSRP) of $140, we begin by calculating the difference between the MSRP and the cost.

The markup in dollars is calculated as follows:

Markup in dollars = MSRP - Cost

Markup in dollars = $140 - $75 = $65

Next, to find the markup percentage, we use the formula:

Markup percentage = (Markup in dollars / Cost) x 100

Markup percentage = ($65 / $75) x 100 = 86.67%

This shows that the item experiences a markup of $65, leading to a markup percentage of 86.67%. This normalization of pricing shows a healthy profit margin for the retailer, suggesting that the retail price is significantly higher than the cost, thereby allowing for profit.

In addressing the other options: The assertion about a 50% markup percentage lacks proper calculation and context since the actual calculated percentage is significantly higher. The retail price being below cost is incorrect as the MSRP is well above the cost, demonstrating there is no loss involved in this scenario. Moreover, the claim regarding a negative profit margin does not apply here since the item is actually marked