Jay King, owner of a local Bed and Bath store, knows that his customers will pay at most $299 for a blow-up bed. Assuming Jay wants a 40% markup on the selling price, the most he could pay the manufacturer for the blow-up bed is:
A) $197.04
B) $179.04
C) $104.65
D) $179.40
E) None of these

Question

Quizplus · Accepted Answer

Let's start by using the formula for calculating the selling price based on markup: Selling Price = Cost + (Markup % * Cost)

We know that the most customers will pay for the blow-up bed is $299, so we plug that in as the selling price and the markup we want is 40%:

$299 = Cost + (0.40 * Cost)

Simplifying:

$299 = 1.4 * Cost

Cost = $299 / 1.4 = $213.57

So the most Jay could pay the manufacturer for the blow-up bed is $213.57. The closest answer choice to this amount is D) $179.40.

To check if this is correct, we can calculate the markup Jay would make from this cost:

Markup = Selling Price - Cost = $299 - $179.40 = $119.60

Now we can calculate the percentage markup:

Percentage Markup = Markup / Cost = $119.60 / $179.40 = 0.6667...

Multiplying by 100 to convert to a percentage, we get a markup of approximately 66.67%, which is indeed a 40% markup on the selling price of $299.

Therefore, the best choice is D) $179.40.

Jay King, Owner of a Local Bed and Bath Store