Let the C.P. be Rs.100
Let the Marked Price be Rs.x
Discount=10% of x=x/10
But S.P. is also equal to Rs.126
According to the sum,
He has marked the item Rs.40 above C.P.
Ans:The M.P. is above the C.P. by 40%(In other words, The trader marked the item 40% above the C.P.)