If a shoe costs the shop $80 and uses a cost-plus 75% pricing strategy, what is the selling price before promotions?

If a shoe costs the shop $80 and uses a cost-plus 75% pricing strategy, what is the selling price before promotions?

• A. 120
• B. 140
• C. 100
• D. 110

Answer: (B)

In cost-plus pricing, you set the selling price by adding a markup to the cost, with the markup calculated as a percentage of the cost. Here, the cost is 80 and the markup is 75% of that cost, which is 0.75 × 80 = 60. Add that to the cost: 80 + 60 = 140. So the selling price before promotions is 140. The other figures would correspond to smaller markups (e.g., 120 would be a 50% markup, 100 a 25% markup, etc.), which don’t match the 75% requirement.

In cost-plus pricing, you set the selling price by adding a markup to the cost, with the markup calculated as a percentage of the cost. Here, the cost is 80 and the markup is 75% of that cost, which is 0.75 × 80 = 60. Add that to the cost: 80 + 60 = 140. So the selling price before promotions is 140. The other figures would correspond to smaller markups (e.g., 120 would be a 50% markup, 100 a 25% markup, etc.), which don’t match the 75% requirement.