Involve markup, the amount added to the dealer's cost of an...

Involve markup, the amount added to the dealer's cost of an item to arrive at the selling price of that item.
The selling price of a refrigerator is $\$ 584 .$ If the markup is $25 \%$ of the dealer's cost, what is the dealer's cost of the refrigerator?

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Key Concepts

Markup

Markup is the additional amount added to the original cost of an item in order to set its selling price. It represents the profit margin and is usually calculated as a percentage of the cost, reflecting the retailer's intended profit over the base price of the product.

Percentage

A percentage is a mathematical expression that represents a fraction of 100. In financial calculations, percentages are commonly used to calculate changes in value such as markups, discounts, or interest rates, and they allow for easy comparison and scaling of different values.

Cost and Selling Price Relationship

The relationship between cost and selling price is fundamental in pricing strategies. The selling price is determined by adding the markup (which is a percentage of the cost) to the dealer’s cost. This concept helps in understanding how the base cost of an item is increased to generate revenue and profit.

Reverse Percentage Calculation

Reverse percentage calculation is a technique used to determine the original value before a percentage increase or decrease was applied. In the context of pricing, it allows one to work backwards from the known selling price and the given markup percentage to determine the dealer's original cost.

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