RPM manufactures racks for CDs. Costs are $8.10 per rack. A wholesaler buys CD racks from RPM at $18.90 each, then sells them at $30.80 to retailers. The retailer sells the racks for $46.50 each to consumers. If the wholesaler decides to drop their price to the retailer by $5/unit and the retailer maintains the same margin % calculated in the previous question, what will be the price to the end customer for the CD rack now?
(Below are the previous figures calculated for related questions, in case they are needed for the bolded calculation above)
What is the percentage margin the retailer achieves per rack? 33.8%
What is the retailer's dollar margin per rack? $15.70
What is RPM's unit margin per rack (in dollars) when RPM sells the racks to the wholesaler? $10.80
Revised selling price of Wholesaler = 30.80-5 = $25.80 per rack
% margin of retailer = 33.8%
Price to end customer now = Revised Cost to retailer/(1-Margin %)
= 25.80/(1-33.8%)
= $38.9728 per rack
Hence, price to end customer = $38.97
RPM manufactures racks for CDs. Costs are $8.10 per rack. A wholesaler buys CD racks from...
RPM manufactures racks for CDs. Costs are $8.10 per rack. A wholesaler buys CD racks from RPM at $18.90 each, then sells them at $30.80 to retailers. The retailer sells the racks for $46.50 each to consumers. If the wholesaler decides to drop their price to the retailer by $5/unit and the retailer decides to base the retail price on markup instead of margin, but using the same percentage, what will be the final selling price to the consumer? (Below...
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