Asked by megan shipley on May 30, 2024
Verified
A dining room set costs $400, less 30% and 10%. The overhead costs are 25% of cost and operating profit is 30% of cost. After three months, the set is reduced to $200. What is the rate of markdown of the set?
A) 95.3%
B) 75.6%
C) 36.5%
D) 20.6%
E) 48.8%
Overhead Costs
Expenses related to the day-to-day running of a business that are not directly linked to the production of goods or services.
Operating Profit
The income generated from the main activities of a company, not including interest and tax expenses.
Markdown
The amount that the price of an item is reduced from the regular selling price.
- Explore the relationship between discounts, markdowns, operating expenses, and product pricing decisions.
Verified Answer
ZK
Zybrea KnightJun 05, 2024
Final Answer :
A
Explanation :
The initial price after discounts is $400 * (1 - 0.30) * (1 - 0.10) = $252. The final price is $200. The markdown is calculated as (Original Price - Sale Price) / Original Price = ($252 - $200) / $252 = 20.6%. However, the correct calculation for the rate of markdown from the original price of $400 to the sale price of $200 is ($400 - $200) / $400 = 50%. None of the provided options accurately reflect this calculation, indicating a possible misunderstanding in the question's solution process. The closest option given the initial misunderstanding would be E) 48.8%, but this does not match the correct calculation from the original price.
Learning Objectives
- Explore the relationship between discounts, markdowns, operating expenses, and product pricing decisions.