2. Patio Furniture Ltd. bought a set of patio furniture fo $576 less a discount

Question

2. Patio Furniture Ltd. bought a set of patio furniture fo $576 less a discount of 15%) The set is normally priced to give a markup on selling price of 45%. The patio set is marked down 50%for a spring sale. (10 marks) a. What was the selling price? b. What was the sale price? What was the operating profit/ loss at the sale price if operating expenses were 25% of cost? What is the markup on cost at the sale price? e. What is the break-even selling price? What was the rate of markup on the selling price?

Explanation / Answer

Cost = 576*0.85= 489.6

a) Selling price * 0.55 = Cost price

Selling price = 489.6/0.55= 890.18

b) Sale price = 445.09

c) Operating profit = 445.09 - 1.25* 489.6=-166.91

d) Markup on cost = (489.6-445.09)/489.6=9.09%

e) Break even selling price = 1.25*489.6=612

f)

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