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

To calculate the markdown percentage, what must you do?

1. Multiply the original selling price by the markdown

2. Divide the original selling price by the markdown

3. Divide the markdown by the original selling price

4. Multiply the markdown by the original selling price

The correct answer is: Divide the markdown by the original selling price

To determine the markdown percentage, you need to express the markdown as a portion of the original selling price. This is done by dividing the markdown amount—the difference between the original price and the discounted price—by the original selling price. When you calculate the markdown percentage, the formula you’re using is: Markdown Percentage = (Markdown Amount / Original Selling Price) x 100 By dividing the markdown by the original selling price, you gain the fraction that represents the portion of the original price that the markdown constitutes. This fraction can then be multiplied by 100 to convert it into a percentage, providing a clear understanding of how much the markdown affects the original price. This method efficiently conveys the significance of the markdown in relation to the pricing strategy, helping businesses analyze their discounts and pricing adjustments effectively.