Question

 

 500 bags of onions were purchased at 2.51 per bag. The desired markup is 43% based on selling price, but 20% spoilage is expected. What should be the selling price per bag?

 

 

Answer 1

Total saleble bags = Total bags - spoilage

= 500 - 500 x 20%

= 500 - 100

= 400 bags

Total costs of bags = No. of bags x purchase costs per bag

= 500 x $2.51 per bag

= $1,255

Total sales =  Total costs of bags / (1 - markup rate)

= $1,255 / (1 - 0.43)

= $2,202

Selling price per bag = Total sales / Total no. of bags sold

= $2,202 / 400

= $5.50 per bag