Ajax Corporation purchases business furniture at a cost of $500 less 18%. Its policy is to mark-up the cost of the furniture by 30% of the selling price. As well, operating expenses are 20% of cost. In order to breakeven, Ajax has to sell the furniture at a selling price of $450.

Question

Quizplus · Accepted Answer

The cost of the furniture after the discount is $410 ($500 - 18% of $500 = $500 - $90 = $410). To calculate the selling price for a 30% markup on the selling price (SP), we use the formula SP = Cost / (1 - Markup Percentage). However, the given information is not sufficient to accurately determine the break-even selling price without knowing the exact relationship between the markup based on selling price and how operating expenses are factored into their pricing strategy. The provided statement simplifies the calculation without considering the correct application of the markup based on selling price and operating expenses in the break-even analysis.

Ajax Corporation Purchases Business Furniture at a Cost of $500