A manufacturer of skis offered chain discounts of 10/5/4 to many of its customers. Joe Jones ordered skis that had a total list price of $149,500. The amount of the trade discount is:

Question

Quizplus · Accepted Answer

The chain discounts of 10/5/4 mean that the customer is entitled to a discount of 10% for the first stage of the discount, then 5% for the second stage, and finally 4% for the last stage. To calculate the amount of the trade discount, we need to multiply the list price by each discount percentage and then subtract the resulting amount from the list price.

First, we calculate the amount of the first stage discount:
10% of $149,500 = $14,950

We subtract this amount from the list price to find the net price after the first stage discount:
$149,500 - $14,950 = $134,550

Next, we calculate the amount of the second stage discount:
5% of $134,550 = $6,727.50

We subtract this amount from the net price after the first stage discount to find the net price after both the first and second stage discounts:
$134,550 - $6,727.50 = $127,822.50

Finally, we calculate the amount of the last stage discount:
4% of $127,822.50 = $5,112.90

We subtract this amount from the net price after both the first and second stage discounts to find the final net price:
$127,822.50 - $5,112.90 = $122,709.60

Therefore, the amount of the trade discount is $122,709.60, which is choice C.

A Manufacturer of Skis Offered Chain Discounts of 10/5/4 to Many