Question

Costco can purchase a bag of Starbucks coffee for $20.00 less discounts of 20%, 15%, and 7%. It then adds a 40% markup on cost. Expenses are known to be 25% of the regular unit selling price.

a. What is the cost of the coffee?

b. What is the regular unit selling price?

c. How much profit will Costco make on a bag of Starbucks coffee?

d. What markup on selling price percentage does this represent?

e. Repeat questions (a) through (d) if the list price changes from $20.00 to $24.00.

Answer 1

1.
Cost=20*(1-20%)*(1-15%)*(1-7%)=12.65

2.
Selling Price=12.65*(1+40%)=17.71

3.
Profit=17.71-12.65-17.71*25%=0.63

4.
=(17.71-12.65)/17.71=28.571%

1.
Cost=24*(1-20%)*(1-15%)*(1-7%)=15.18

2.
Selling Price=15.18*(1+40%)=21.25

3.
Profit=21.25-15.18-21.25*25%=0.76

4.
=(21.25-15.18)/21.25=28.565%