3. The Nguyen Company sells beautiful oriental water fountains through wholesale

Question

3. The Nguyen Company sells beautiful oriental water fountains through wholesalers and retailers. They suspect that the retailer is taking an extra 15% more in markup than they should but Nguyen Management cannot prove it. The retail selling price is $1199.99 and the manufacturing cost to the company is $425.00. The retail markup was 38 percent and wholesale markup was 25 percent. (Value 9 pts) A. What was the cost to the wholesaler?__________ B. What was the cost to the retailer? ____________ C. What percentage markup did the producer make?__________Show your calculations for each problem.   If I do not see the calculations, then I will not give credit. These can be typed on this form

Explanation / Answer

To be calculated:

a) Wholesaler Cost

b) Retailer Cost

c) Manufacturer Markup Percentage

Given Information:

Retail Selling Price = $1199.99

Manufacturing Cost = $425

Retail Markup = 38%

Wholesale Markup = 25%

Step-1: Retailer Markup is 38%, therefore, retailer cost can be calculated as:

1.38 x (Retailer cost) = (Retailer selling price)

1.38 x (Retailer cost) = 1199.99

Retailer cost = 1199.99 / 1.38 = 869.56 = $870

Step-2: Wholesale Markup is 25%, therefore, wholesaler cost can be calculated as:

1.25 x (Wholesaler cost) = (Wholesaler price) = (Retailer cost)

1.25 x (Wholesaler cost) = 870

Wholesaler cost = 870 / 1.25 = $696

Step-3: Manufacturer cost is $425, therefore, manufacturer markup percentage can be calculated as:

(Manufacturer markup %) = {(Wholesaler cost) - (Manufacturer cost)} / (Manufacturer cost) x 100

(Manufacturer markup %) = {696 - 425} / 425 x 100

Manufacturer markup % = 271 / 425 = 0.64 x 100 = 64%

Answer:

a) Wholesaler cost = $696 b) Retailer cost = $870 c) Manufacturer markup percentage = 64%

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