Mathematics, 24.11.2019 08:31 1846252
Mat 145
case study # 5: markup / markdown
show all your work for full credit; explanations must be in paragraph form.
answers must be rounded to the nearest hundredth.
rei is a ccoperative that focuses on the great out-of-doors. although anyone can shop at rei, the firm is owned by the members who pay a one-time fee of $20 and receive annual dividends based on company profit and the amount of each member’s annual purchases.
a marketing manager was interested in a new line of off-piste skis for skiing over rugged terrain and jumping off cliffs. the manager works with james smelter in inventory to place the following orders for two different skis.
orders model name number total cost
1st order steep alpine 15 pairs $4395
2nd order cliff hoppers 22 pairs $7194
1. find the cost per pair of skis for both models.
orders model name number total cost cost per pair of skis
1st order steep alpine 15 pairs $4395 293
2nd order cliff hoppers 22 pairs $7194 327
cost per pair of skis = total cost / number of pairs
steep alpine= $4395 / 15 cliff hoppers = $7194/22
steep alpines= $293 cliff hoppers = $327
2. if the markup on cost for each pair of skis is 38%, find the list price for each.
orders model name number total cost cost per pair of skis
1st order steep alpine 15 pairs $4395 293
2nd order cliff hoppers 22 pairs $7194 327
markup percentage in decimal = 38% / 100 markup in decimal format= 0.38
list price per pair = cost price + (cost price * markup percentage)
steep alpine = 293+(293*0.38) cliff hoppers = 327 +(327*0.38)
steep alpine = 293+111.34 cliff hoppers = 327+124.26
steep alpine= 404.34 cliff hoppers = 451.26
3. the skis were received on january 1 and a physical inventory at the end of january showed that 7 pairs of step alpine and 14 pairs of cliff hoppers remained. find the average inventory at cost.
orders model name number cost per pair of skis total
cost
1st order steep alpine 7 pairs 293 $2,051
2nd order cliff hoppers 14 pairs 327 $4,578
total value of inventory $6,629
total cost = number of skis * cost per pair of skis
total cost = 7*293 total cost = 14*327
total cost= 2,051 total cost = 4,578
total value of inventory = steep alpine total cost + cliff hoppers total cost
total value of inventory= $2,051 + $4,578
total value of inventory = $6,629
4. use the data for these skis to find the turnover at cost for the month of january.
orders model name number cost per pair of skis total cost
1st order steep alpine 15 pairs 293 $4,395
2nd order cliff hoppers 22 pairs 327 $7,194
total purchase $11,589
turnover at cost = cost of goods sold / average inventory at cost
turnover at cost = $11,589 / $6,629
turnover at cost = 1.75
5. the two managers are not happy with the quality of the skis and sell the remaining skis at a markdown of 40%. find the price per pair of skis after being marked down.
orders model name number list price per pair
1st order steep alpine 7 pairs $404.34
2nd order cliff hoppers 14 pairs $451.26
markdown percentage in decimal = 40% / 100 markup in decimal format= 0.40
new price for each model= list price – markdown percentage * list price
steep alpine new price= $404.34 – 0.40 *$404.34
steep alpine new price= $404.34 - $161.74
steep alpine new price= $242.60
cliff hoppers new price= $451.26 – 0.40 * $451.26
cliff hoppers new price= $451.26 - $180.50
cliff hoppers new price= $270.76
6. assume that operating expenses at rei are 22% of cost and determine the amount of any profit on these skis. if there was no profit, find the amount of the operating loss/or the absolute loss.
orders model name number cost per pair of skis total cost list price balance of markdown price
1st order steep alpine 15 pairs 293 $4,395 $404.34 7
2nd order cliff hoppers 22 pairs 327 $7,194 $451.26 14
$11,589
operating expenses percentage in decimal = 22% / 100 operating expenses percentage in decimal format= 0.22
total operating cost= total cost * operating expenses percentage
total operating cost = $11,589 * 0.22
total operating cost = $2,549.58
7. do you think firms often lose money on new products? what do you think would happen to a company that often loses money on new products? explain.
Answers: 2
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Mat 145
case study # 5: markup / markdown
show all your work for full credit...
case study # 5: markup / markdown
show all your work for full credit...
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