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Dear Professor Cram:

Could you tell me what the standard markup for an apparel manufacturer to a retailer is and the formula used? Thanks!

Karen B, Hotmail

Thank you for your interest in College-Cram.com and thanks for your question. You may want to check out our Smartacus Study Sheet on markup and markdown to review our two Cramlets that cover markup (one calculating markup from price, the other from cost).

You seem to be aware that markups vary widely by industry. They also can vary within an industry. I have not worked with an apparel manufacturer, but I have worked with a bedding (sheets/comforters...) company and our markup was 100% to the wholesaler who also made 100% markup to the retailer... our cost was a very low percentage of the retail price, and there was some bit of discounting done in our line. I suspect that much apparel is priced similarly.

The formula for Markup from Cost is:

Price = Cost x (1 + Rate)

I hope this helps. Let us know if you need anything else.

Dear Professor Cram:

I'm having difficulty with this economics question and desperately need your help. You are offered a job in Boston that pays $80,000 per year and a job in Fort Worth that pays $60,000 per year. Fort Worth's CPI is 110 and Boston's CPI is 160. What is the Boston job's purchasing power in Fort Worth dollars?

Susie A., South Carolina

Thanks for your question, Susie. This is classic CPI-salary problem, one that you may see for real after you graduate and start looking for a full-time job.

In economics, CPI (or consumer price index) is a relative value we can use to compare the cost of consumer goods in different parts of the country. A higher CPI value indicates a more expensive place to live, while a lower CPI indicates a relatively cheaper place. The base CPI value is 100.

To evaluate your problem, let's begin by dividing the Boston salary by its CPI value:

• $80,000/160 = $500

This means that the Boston salary is worth $500 for every CPI point. Since Fort Worth has a CPI of 110, we'll multiply $500 by 110:

• $500 x 110 = $55,000

Thus, the Boston offer is worth $55,000 in Fort Worth dollars. (Since the Fort Worth offer is worth $60,000, if money was your only consideration you'd probably want to take the Fort Worth job.)