Question

Standard Appliances obtains refrigerators for $1,550 less 27% and 5%. Standard's overhead is 20% of the selling price of $1,590. A scratched demonstrator unit from their floor display was cleared out for $1,205.

a. What is the regular rate of markup on cost?

b. What is the rate of markdown on the demonstrator unit?

c. What is the operating profit or loss on the demostrator unit?

d. What is the rate of markup on cost that was actually realized?

Answer 1

a

Particulars	Amount
List price	$ 1,550.000
Less: discount 27%	$ (418.500)
Balance	$ 1,131.500
Less: discount 3%	$     (33.945)
Purchase price	$   1,097.56
Add: overhead	$      318.00
Total cost	$   1,415.56
Selling price	1590
Less: cost	$   1,415.56
Mark up	$      174.45
/ cost	$   1,415.56
Mark up on cost	12.32%

Mark up on cost is 12.32%

b

Particulars	Amount
List price	1590
Less: selling price	-1205
Mark down	385
Mark down percent	24.21%

Answer is 24.21%

c

Particulars	Amount
Selling price	1205
Less: cost	$ (1,415.56)
Loss on sale	-210.555

d

Rate of mark up on cost is 12.32%