Sunfresh Bakery makes Italian bread that costs $1.34 per loaf. Past experience shows that 8 percent of the loaves will spoil and have to be discarded. Assuming Sunfresh wants a 45 percent markup based on cost and produces 250 loaves, each loaf of bread should sell for:
A) $2.11
B) $2.95
C) $2.08
D) $1.94

Question

Quizplus · Accepted Answer

The cost per loaf is $1.34. With an 8% spoilage rate, the effective cost per loaf increases because only 92% (100% - 8%) of the loaves are sellable. To find the adjusted cost, divide $1.34 by 0.92, which equals approximately $1.46. To achieve a 45% markup based on cost, multiply $1.46 by 1.45 (100% + 45% = 145% or 1.45 in decimal form), which equals approximately $2.11.

Sunfresh Bakery Makes Italian Bread That Costs $1