The markup on Drug Y was calculated by applying what formula?

The formula that defines the markup on a drug typically involves directly calculating the profit added to the retail cost based on a specified percentage. When calculating the markup, the correct approach is to take the retail cost of the drug and multiply it by the established markup percentage. This method reflects the direct relationship between the original cost of the medication and the additional amount that is added to arrive at the retail price, effectively representing how much more consumers pay compared to what the pharmacy originally paid for the drug.

The approach assures that the calculation captures both the cost base and the profit margin simultaneously, making it straightforward for pharmacists to set prices that cover their costs while also ensuring profitability. This method is commonly used in retail operations, including in pharmacy settings, where clear pricing strategies are crucial for both competitive positioning and financial sustainability.