Question 1

Alym Corporation purchases appliances for resale. The average cost of each appliance is $790 less 33%. Operating expenses are 30% of cost. Policy is to have a 44% mark-up on selling price. In order to breakeven Fulton has to sell each appliance at a markdown of 28.70%.

Accepted Answer

The information provided does not allow for a direct calculation of the break-even point based on a markdown of 28.70%. Break-even analysis typically involves calculating fixed and variable costs to determine the number of units that must be sold at a certain price to cover all costs. The markdown percentage alone, without additional financial details, does not directly determine the break-even point.

Question 2

At the sale price, what was the rate of mark-up on cost?

Accepted Answer

The answer of At the sale price, what was the...

Question 3

If the rate of mark-up on an item is 80% of cost and it is later sold after a 40% markdown, what is the rate gross profit that was actually realized?

Accepted Answer

The answer of If the rate of mark-up on an...

Question 4

Fasbe Corporation purchases computers at a cost of $425 less 9%. Its policy is to mark-up the cost of the computers by 40% of the selling price. As well, operating expenses are 15% of cost. In order to breakeven, Fasbe has to markdown the selling price by 33%.

Accepted Answer

The information provided does not allow for a direct calculation of the break-even point without specifying the original selling price or the exact cost after the discount and markup calculations. The break-even point would depend on the actual selling price after applying the markup and the markdown, which cannot be determined with the given details.

Question 5

Fulton Corporation purchases leather sofas for resale. The cost of each leather sofa is $1200 less 13%. Operating expenses are 10% of cost. Policy is to have a 15% mark-up on selling price. In order to breakeven Fulton has to sell each leather sofas at a markdown of 10%.

Accepted Answer

The information provided does not allow for a direct calculation of the break-even point based on the markdown percentage alone. Break-even analysis would require understanding the fixed costs and how the combination of variable costs and selling price (after any markdowns) covers those costs. The statement conflates various percentages (discounts, markups, operating expenses) without directly linking them to a break-even analysis that incorporates all relevant costs and revenues.

Question 6

Bulk baking sugar was sold in 30Kg packages at a cost of $64 less 30%, 12% and 3%. The retail price is based on a 35% mark-up on the selling price. The final selling price is $58.83.

Accepted Answer

The given information is sufficient to calculate the final selling price and verify if it matches the provided value of $58.83.

Question 7

Mercola's Equipment Warehouse purchased equipment for resale at $2,420 less 9%, 44% and 13%. Mercola has operating expenses equal to 56% of the product cost. There is a 56% mark-up on the selling price. If Mercola wanted to break-even, then it would have to sell the equipment at $1,574.74 to break-even.

Accepted Answer

To determine if the statement is false, we need to calculate the break-even selling price based on the given information. First, calculate the cost after discounts:1. Original price = $2,4202. After 9% discount = $2,420 - ($2,420 * 0.09) = $2,202.203. After an additional 44% discount = $2,202.20 - ($2,202.20 * 0.44) = $1,233.234. After a final 13% discount = $1,233.23 - ($1,233.23 * 0.13) = $1,072.91This $1,072.91 is the cost price. Operating expenses are 56% of this cost:Operating expenses = $1,072.91 * 0.56 = $601.23Total cost (product cost + operating expenses) = $1,072.91 + $601.23 = $1,674.14To break even, Mercola needs to sell the equipment for at least the total cost of $1,674.14, not $1,574.74 as stated. Therefore, the statement is false.

Question 8

A retailer marks up all cosmetic products to allow for overhead expenses of 40% of cost and operating profit of 25% of cost. If a product does not sell within two months, the product is marked down to its break-even price. What rate of markdown is the retailer using?

Accepted Answer

The break-even price is the cost price, which includes the overhead expenses (40%) and operating profit (25%), totaling 65% markup on cost. The markdown to reach break-even price from the marked-up price removes this 65% increase, which is not a straight 65% markdown due to the base for markdown being higher. The effective rate of markdown is calculated based on the final price being equal to the cost price, which after accounting for the markup, results in a 15.2% markdown from the selling price to reach the cost price again.

Question 9

Pari Corporation purchases crystal vases for resale. The cost of each vase is $77 less 25%. Operating expenses are 30% of cost. Policy is to have a 60% mark-up on selling price. In order to breakeven Pari has to sell each vase at $75.08 or a 48% markdown.

Accepted Answer

The given information states that Pari has to sell each vase at $75.08 or a 48% markdown to breakeven.

Question 10

A wholesaler sells a jacket that is normally $152 less 36%, 36% and 27%. If the mark-up on the jacket is 68%, then the selling price is $152.03

Accepted Answer

The calculation for the final selling price after discounts and markup does not result in $152.03. To find the correct selling price, you would first apply each discount sequentially to the original price and then apply the markup to the discounted price. The provided statement does not give enough information to accurately calculate the final selling price, and the specific numbers given do not align with typical calculations for discounts and markups.

Question 11

The distributor of Nikita power tools is offering a trade discount of 38% to hardware stores. What will be their cost to purchase a rotary saw listed at $135?

Accepted Answer

The answer of The distributor of Nikita power tools is...

Question 12

Fixtures were purchased at a cost of $615 less 25% and 8%. The net discount amounts to 31%.

Accepted Answer

The net discount is 31%, which is equal to 25% + 8% - (25% * 8%).

Question 13

Carl's Camping purchases high-end camping tents for $1,795 less 5%, 12% and 6%. Carl's operating expenses are 64% of cost, and Carl usually has a 54% mark-up on selling price. Given this information, operating expenses are $902.77

Accepted Answer

The given information states that operating expenses are $902.77, which is correct according to the provided calculations.

Question 14

Car parts were purchased at a cost of $810 less 15%, 10% and 5%. The net cost of the parts were $603.20.

Accepted Answer

The net cost is calculated by sequentially applying the discounts on the original price. First, a 15% discount on $810 gives $688.50. Then, a 10% discount on $688.50 results in $619.65. Finally, a 5% discount on $619.65 gives a net cost of $588.67, not $603.20.

Question 15

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.

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.

Question 16

The rate of mark-up on selling price is 20% for an item that cost the retailer $84. What is the selling price?

Accepted Answer

The mark-up rate on the selling price means that the profit is 20% of the selling price. Let the selling price be $x$. Thus, $x - 84 = 0.20x$. Solving for $x$, we get $x = 105$.

Question 17

What was the profit (loss) at the sale price?

Accepted Answer

The answer of What was the profit (loss) at the...

Question 18

"Paul's Guitars always sells for Less" is a music store in Acoostic, Alberta. Their overhead expenses are 15% of cost. They recently sold a guitar for $675 and the mark-up on that guitar was equal to 22% of the selling price. How much net profit did they realize on that sale?

Accepted Answer

The answer of "Paul's Guitars always sells for Less" is...

Question 19

Fine's Furniture pays the manufacturer $200 for a reclining chair. They set a retail price to cover overhead expenses of 22% of cost plus profit. If they sell the chair for $399 what is their rate of profit expressed as a percentage of cost?

Accepted Answer

The answer of Fine's Furniture pays the manufacturer $200 for...

Question 20

A retailer marks up all cosmetic products to allow for overhead expenses of 30% of cost and operating profit of 40% of cost. If a product does not sell within two months, the product is marked down to its break-even price. What rate of markdown is the retailer using?

Accepted Answer

The retailer marks up the product by 70% (30% + 40%) and then marks it down to its break-even price, which is 30% below the cost. So, the rate of markdown is 30% / 70% = 23.5%.

Quiz 4: Mathematics of Merchandising