Question

Slotnick Chemical received $260,000 from customers as deposits on returnable containers during 2018. Fifteen percent of the containers were not returned. The deposits are based on the container cost marked up 25%. How much profit did Slotnick realize on the forfeited deposits? Multiple Choice o o $9,750. o $7,800. o $39,000.

Answer 1

To determine the profit Slotnick realized on the forfeited deposits, we will calculate the 15% of the total container and then find out the original price of that.

15% of the containers= 15%*$260,000 = $39,000

39,000 is the selling price and it includes markup of 25%, so to find out the original price we have to divide Selling price by1.25 ( 1+ 25% markup).

Original price = 39,000/1.25 = 31,200

So the profit will be = Selling price - Original price = $39,000-$31,200 = $7,800