Future Business Leaders of America (FBLA) Business Calculations Practice Test

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Dive into the FBLA Business Calculations Test. Sharpen your analytical skills with multiple-choice questions and gain insights with detailed explanations. Excel in your exams!

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An air compressor costs $350 and sells for $695. Find the rate of markup based on the selling price.

A. 20.15 percent
B. 50.4 percent
C. 49.6 percent
D. 98.6 percent

The correct answer is: C. 49.6 percent

To find the rate of markup based on the selling price, we need to determine how much the selling price exceeds the cost price, and then express this difference as a percentage of the selling price. First, we calculate the markup amount by subtracting the cost from the selling price: Selling price: $695 Cost price: $350 Markup amount = Selling price - Cost price = $695 - $350 = $345 Next, we need to find the rate of markup based on the selling price. This is calculated using the formula: Rate of markup = (Markup amount / Selling price) × 100 Substituting in our values: Rate of markup = ($345 / $695) × 100 Performing the division gives us approximately 0.496 and when we multiply this by 100, we get approximately 49.6 percent. This result indicates that the markup amount is 49.6 percent of the selling price, confirming that the rate of markup is not based on the cost price but rather on how much the price exceeds the cost relative to how much the item sells for. Therefore, the correct answer accurately reflects this calculation.