In: Accounting
A wholesaler sells to furniture stores with discounts of 45% and 15%. Individual designers are allowed a discount of 50%. On an order with total list price of $2,860, what is the difference in cost to these two purchasers
Solution:
Calculation of Cost to Furniture stores
Cost of Furniture = List Price * (1 - 0.45) * (1 - 0.15)
= $2,860 * (0.55) * (0.85)
= $1,337.05
Calculation of Cost to Individual Designers
Cost of Furniture = List Price * (1 - 0.50)
= $2,860 * (0.50)
= $1,430
Calculation of difference in cost for two Purchasers
Difference in Cost = Cost to Individual Designers - Cost to Furniture Stores
= $1,430 - $1,337.05
= $92.95