In marginal on sales pricing, which statement describes selling price, cost, and profit margin as percentages of selling price?

• A. Selling price 100%, Cost 70%, Profit margin 30%
• B. Selling price 100%, Cost 60%, Profit margin 40%
• C. Selling price 100%, Cost 40%, Profit margin 60%
• D. Selling price 100%, Cost 50%, Profit margin 50%

Answer: (B)

When pricing as a percentage of selling price, the selling price is taken as the reference point and set at 100%. The cost is some percentage of that selling price, and the profit margin is whatever part of the selling price remains after covering cost. In other words, profit margin on selling price = 100% − cost percentage.

So, if the cost is 60% of the selling price, the profit margin must be 40% (100% − 60% = 40%). This matches the statement where selling price is 100%, cost is 60%, and profit margin is 40%.

This setup reinforces the idea that the three figures must sum to 100% when expressed as percentages of the selling price, with margin representing the remaining portion after cost.