if you paid 70.00 for an item after 5% sales tax, and the company marks up each item by 20%. what was the wholesale cost of the item.

Question

I was asked this question yesterday and am lost each time.   Please help.

Answer 1

Marked up price before tax= 70/1.05=$66.67

Total Price = price +price*5/100=70=> price(1+5/100)=70=>price(1+0.05)=70=>price=70/1.05

Before-markup price + Before-markup price *20/100=After-markup price= 66.67

 

Before-markup price  = 66.67/1.2 = $55.56

I hope this helps

Answer 2

First find the price of the item before sales tax.

 

p = price

 

70 = 1.05p                1 for the price, 0.05 for the tax

66.67 = p

 

c = wholesale cost

 

66.67 = 1.2c              1 for the cost, 0.2 for the markup

55.56 = c

 

The whole sale cost was $55.56.