1. Costco wants to maintain a 14% mark-up at retail level. If they paid $550 for...
1. Costco wants to maintain a 14% mark-up at retail level. If they paid $550 for a necklace, what is the retail price?
2. You are running a sale on pink flamingos: 20% off the retail price of $19.99. 65 are in stock. What is the total markdown amount
3. If fixed costs are $100, price per unit is $10, and variable costs per unit are $6, then the break-even quantity is
Homework Answers
1.
It is not mentioned whether the mark-up is on cost or on the selling price. We assume it is on the selling price i.e. retail price.
So,
Markup (amount) = Retail price * Markup %
or, Retail price - Cost = Retail price * Markup %
or, Retail price * (1 - Markup %) = Cost
or, Retail price = Cost / (1 - Markup %) = 550 / (1 - 0.14) =
$639.53
2.
Total markdown amount = 20% * Retail price * Volume = 20%*19.99*65 = $259.87
3.
Break-even qty = Fixed cost / (Selling price - Unit variable cost) = 100 / (10 - 6) = 25 units
Add Answer to:
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