Step 1: Understanding the Problem
In this problem, Ed is buying a vase for £24 and he wants to sell it in his shop for a profit. To do this, he adds a 25% markup onto the original cost before putting the vase in his shop window. The task here is to find the price that Ed puts on the price tag in his shop.
Step 2: Understanding Markup
Markup is an amount added to the cost price to determine the selling price. It’s often used in retail settings to set prices that provide a profit. The markup can be a percentage, like in this case, or it could be a fixed amount.
In this case, Ed is using a 25% markup. This means he’s increasing the original cost of the vase by 25% to determine its selling price.
Step 3: Calculating the Markup Amount
Before we can calculate the final price of the vase, we need to calculate the amount Ed is adding to the original cost of the vase.
To do this, we multiply the original cost by the markup percentage.
Markup Amount = Original Cost * Markup Percentage Markup Amount = £24 * 25% = £6
So, Ed is adding £6 to the original cost of the vase.
Step 4: Calculating the Final Price
The final price of the vase is the original cost plus the markup amount. We already know the original cost is £24 and the markup amount is £6. So, we just need to add these together.
Final Price = Original Cost + Markup Amount Final Price = £24 + £6 = £30
So, the price that Ed puts on the price tag in his shop window is £30.
This problem is a practical example of how markup pricing works in a retail environment, showing how retailers set prices to cover their costs and make a profit.