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In: Finance
A furniture supplier lists a dining room set for $1,800 and offers trade discounts of 25%,...
A furniture supplier lists a dining room set for $1,800 and offers trade discounts of 25%, and 10% to its retailers. The retailer's overhead expenses are 29% of cost and operating profit is 22% of the cost. After three months, the price is reduced to $1,614. What is the rate of markdown at the sale price? Your answer should be accurate to two decimal places. Markdown =$ What is the break-even price of the set? For full marks your answer(s) should be rounded to the nearest cent .Break-even price =
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Expert Solution
Before 3 month After 3 month
List Price 1800 1614
Less: Trade Discount (25%) 450 403.5
Price after Trade Discount 1350 1210.5
Less: Retailer Discount (10%) 135 121.05
A)Cost Price 1215 1089.45
B) Overhead expenses (29 % of Cost) 1215 * 29% 1089.45*29%
352.35 315.94
C) Operating Profit (22% of cost) 1215 * 22 % 1089.45*22%
267.3 239.68
Sale price of retailer (A+B+C) 1834.65 1645.07
Break-even point of set 1567.35 1405.39
Markdown in the sale price after 3 months = $ 189.58
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