M Studios buys cameras at a unit cost of $125. Their operating expense is 45% per unit of cost, and their desired unit operating profit is 25% of cost. What is M Studios' rate of mark-up on selling price?

A) 60%
B) 45%
C) 25%
D) 41.2%
E) 40%

The mark-up on selling price is calculated by dividing the total profit by the selling price. The total cost per unit is $125, and the operating expense is 45% of this cost, which is $56.25. Therefore, the total cost including operating expense is $125 + $56.25 = $181.25. The desired profit is 25% of the cost, which is $31.25. So, the selling price must be $181.25 + $31.25 = $212.50. The mark-up on selling price is then the profit divided by the selling price: $31.25 / $212.50 = 0.147 or 14.7%. However, this calculation seems to have an error in interpreting the desired profit margin and its application. Let's correct the approach:The correct calculation should consider the desired operating profit as a markup on cost, and then find the markup percentage on the selling price. The cost is $125, and the operating expense is 45% of this, which is indeed $56.25, making the total cost $181.25 when considering the expense. However, the desired profit is not added on top of this sum in the manner previously described.Instead, the correct approach to find the selling price including a 25% profit on the cost (not on the total cost including operating expense) would be to calculate the profit as 25% of $125, which is $31.25, and add this to the original cost plus operating expense to find the intended selling price. However, the mistake lies in the interpretation of how the markup on the selling price is calculated, which should be based on the difference between the selling price and the total cost (cost plus operating expense), divided by the selling price.Given the confusion in the explanation and calculation, let's clarify the correct approach:1. Calculate the total cost including operating expense: $125 + ($125 * 45%) = $181.25.2. The desired profit is 25% of the cost, which is $31.25.3. The intended selling price to achieve this profit would be the cost plus the profit: $125 + $31.25 = $156.25.4. The markup on the selling price is then calculated as (Selling Price - Cost) / Selling Price. However, given the error in the profit calculation and its addition, the correct markup calculation was not provided based on the given options.The correct approach to find the markup on selling price involves correctly calculating the selling price to include the desired profit margin over the total cost and then applying the markup formula. Given the misunderstanding in the calculation provided, the correct answer should reflect the proper calculation of the selling price including a 25% profit margin on the cost and then finding the markup percentage based on that selling price. The correct markup calculation would involve determining the selling price that includes the operating expense and desired profit, then calculating the markup based on this selling price. However, without the correct final selling price calculation, the provided answer choice and explanation do not align correctly with the standard formula for markup on selling price.