Mike Albers works during the summer at his uncles produce stand. Tomatoes are priced at $1.99 per pound Mikes uncle estimates that his total cost in producing and transporting the tomatoes is about $0.95 per pound. What is the markup rate based on cost for the tomatoes
The markup rate based on cost for the tomatoes can be calculated by subtracting the total cost per pound from the selling price per pound and then dividing by the total cost per pound.
Markup Rate = (Selling Price - Cost Price) / Cost Price
In this case, the selling price per pound is $1.99 and the cost price per pound is $0.95.
Markup Rate = ($1.99 - $0.95) / $0.95
= $1.04 / $0.95
= 1.0947
The markup rate based on cost for the tomatoes is approximately 1.0947, or 109.47%.