Many different businesses employ markup on cost to arrive at a price. For each of the fol¬

lowing situations, explain what the markup covers and why it is the amount that it is.

a. Department stores have a markup of 100% of purchase cost.

b. Jewelry stores charge anywhere between 100% and 300% of cost of the jewelry. (The 300‘!o markup is referred to as "keystone.")

c. Johnson Construction Company charges 12% on materials, direct labor, and subcon¬
tracting cost.

d. Hamilton Auto Repair charges customers for direct materials and direct labor. Cus¬
tomers are charged $45 per direct labor hour worked on their job; however, the em¬
ployees actually cost Hamilton $15 per hour.