What term describes the amount added to the cost of merchandise to determine its selling price?

The term that describes the amount added to the cost of merchandise to determine its selling price is markup. Markup specifically refers to the difference between the cost of an item and its selling price, expressed either in terms of a dollar amount or a percentage of the cost. It is a crucial concept in pricing strategy, as it ensures that the seller covers the cost of goods and generates a profit.

In a retail context, calculating markup helps businesses determine how much they can charge customers to remain profitable while being competitive in the market. By understanding markup, funeral service providers and other retailers can strategically price their merchandise, ensuring they are operating efficiently and effectively managing their inventory costs.