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Company x uses a markup on cost of 55% to establish its retail prices.This pricing rule builds on a profit of 22% of cost. What rate of markdown can Company X offer to break even on the reduced price?

I have tried 33 as they are covering the cost to break even, 22 to say there is no profit. Also, I tried to say that S is 1.55 C and S reduced is C but is not 55.

Yai Pi Gan
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1 Answers1

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If an item costs $\$1$ to produce then its price is marked as $\$1.55$. If the profit is $\$0.22$, then reducing $\$1.55$ to $\$1.33$ will break even. So percentage reduction on marked price is:

$$\frac{1.55-1.33}{1.55}\cdot 100 = 14.2\%$$

Phil H
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