A local Dunkin' Donuts makes blueberry muffins that cost $.69 each. Past experience shows that 15% of the muffins will spoil and have to be discarded. Assuming that this shop wants a 30% markup based on cost and produces 200 muffins, each muffin should sell for:
A) $.90
B) $.91
C) $1.50
D) $1.06
E) None of these

Question

Quizplus · Accepted Answer

The cost of each muffin is $.69.
15% of the muffins will spoil, so 200 x 15% = 30 muffins will be discarded.
Therefore, only 170 muffins will be sold.
To achieve a 30% markup, the selling price should be 1.3 times the original cost.
1.3 x $.69 = $.897 which can be rounded up to $.90
However, since the question asks for the selling price per muffin, taking into account the 30 spoiled muffins, we get:
Total cost = 170 muffins x $.69/muffin = $117.30
Total cost per muffin, including the discarded ones = $117.30/200 = $.5865
Selling price per muffin = $.5865 x 1.3 = $.76145 which can be rounded up to $.76
Adding a 30% markup, the final selling price per muffin should be:
$.76 + ($.76 x 30%) = $.988 which can be rounded up to $1.06.
Thus, the answer is D.

A Local Dunkin' Donuts Makes Blueberry Muffins That Cost