Question

Costs of retailer selling a quintal of mango Sorting and grading 200 Transportation 300 Loading and unloading 100 Charges towards labor 100 Misc. charges 150 Consumer purchased 1 kilogram of mango for $4. Retailer purchased one quintal of mango for $200 Calculate absolute MARKETING margin of retailer for one kilogram of Mango

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Answer 1

Please note the minor change (Cmi is 8.5 and not 7.5). However there is no change in calculation

Costs of retailer selling a quintal of mango

Sorting and grading	200
Transportation	300
Loading and unloading	100
Charges towards labor	100
Misc. charges	150

Consumer purchased 1 kilograms of mango for $4.

Retailer purchased one quintal of mango for $200

Formula to calculate absolute marketing margin of retailer is PRi * PPi + Cmi

Where PRi is selling price; PPi is purchase price and Cmi is cost incurred on marketing one unit.

PRi is $4 (consumer purchased at $4 that means selling price of retailer is $4)

PPi is $2 (retailer purchased 1 quintal at $200. One quintal is 100 kilograms; therefore purchase price for one kilogram of mango is 200/100= $2)

Cmi is $8.5 (costs of retailer for marketing a mango are given in quintal; they have to be converted into costs per kilogram. Therefore costs are 2+ 3+ 1+ 1+ 1.5= 8.5)

Absolute margin of retailer = 4 * 2 + 8.5= 8+8.5= 16.5

Therefore, absolute margin of a mango retailer is 16.5