Question

On July 8, Leon's Kitchen Hut bought a set of pots with a $120 list price from Lambert Manufacturing, Leon's receives a 25% trade discount Terms of the sale were 2/10,n/30. On July 14, Leon's sent a check to Lambert for the pots. Leon's expenses are 20% of the selling price. Leon's must also make a profit of 15% of the selling price. A competitor marked down the same set of pots 30%. Assume Leon's reduces its selling price by 30% a. What is the sale price at Kitchen Hut? (Round your answer to the nearest cent.) Sale price b. What was the operating profit or loss? (Input the amount as a positive volue. Round your answer to the nearest cent.)

Answer 1

a)
List Price	$120
Less: Trade discount ($120*25/100)	($30)
Price after trade discount	$90
Less: Discount received ($90*2/100)	($1.80)
Cost Price	$88.20
Expenses are 20% of sales price
Profit is 15% of sales price
$88.20 - 20% of $88.20 + 15% of $88.20
1 - 0.15 - 0.20 = 0.65 = $88.20
$88.20 / 0.65 = $135.69
Selling price	$135.69
Less: Discount on selling price ($135.69*30/100)	($40.71)
Sale price at Kitchen Hut	$94.98
b)
Cost Price	$88.20
Add: Expenses ($135.69*20/100)	$27.14
Total Cost Price	$115.34
Sale price at Kitchen Hut after discount	$94.98
Less: Total Cost Price	($115.34)
Operating loss	($20.36)