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Dec 19, 2015
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Central Ski and Cycle purchased 50 pairs of ski boots for $350 per pair less 30% and 10%. The regular rate of markup on selling price of the boots is 50%. The store’s overhead is 25% of the selling price. During a January clearance sale, the price was reduced to $325 per pair.  What is the rate of markdown and what was the profit or loss on each pair of boots at the sale price? Answer to the nearest cent.

 

Any help with calculations would be greatly appreciated , thanks

 

This is a bit tricky in that it deals with "markups" and " markdowns". Let us see what we can do:

Since they got discounts of 30% and 10% on each pair of $350 boots, the net cost to them would be:

$350.00 - 30% - 10%=$220.50 net cost per pair of boots to the company. But, the company, presumably, intends to sell them at the advertised price of $350 per pair.

So, if they have a sale in January at $325 per pair, the rate of markdown from $350 to $325 would be 7.14%.

Since the markup is 50% of the sale price, then each pair is sold in January for $325 X 1.50=$487.50.

But, the company has "an overhead cost of 25% of the selling price", which means, I think!, that 25% has to come off the selling price of $487.50. If that's right, then $487.50 - 25%=$365.63 net sale price per 1 pair of ski boots.

Since it cost the company $220.50 net per 1 pair of boots, and it sold it for $365.63, then the net profit per 1 pair of ski boots would be:$365.63 - 220.50=$145.13

I think it is right, but I'm no expert in "retail sales"!. See if this makes sense to you!. Good luck.

Dec 19, 2015

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