Question

RPM manufactures racks for CDs. Costs are $8.10 per rack. A wholesaler buys CD racks from RPM at $18.90 each, then sells them at $30.80 to retailers. The retailer sells the racks for $46.50 each to consumers. If the wholesaler decides to drop their price to the retailer by $5/unit and the retailer decides to base the retail price on markup instead of margin, but using the same percentage, what will be the final selling price to the consumer?

(Below are the previous figures calculated for related questions, in case they are needed for the bolded calculation above)

What is the percentage margin the retailer achieves per rack? 33.8%

If the wholesaler decides to drop their price to the retailer by $5/unit and the retailer maintains the same margin % calculated in the previous question, what will be the price to the end customer for the CD rack now? $38.97

Answer 1

e Calculation : New wholesale price = 30.80 - 5.00= 25.80 Retailers margio now be mackup for Percentage of 33.8% will New price. Mark up = 25.80 x 33.8% = 8.72 New Retail Price = 25.80 +8072= $34·52 Final Selling Price to Consumer is $34.52. Markup is margin is calculated at Cost Price while calculated at Sales Price. At Same Cost price of 25.80 and Same Percent 33.80% when new price was Calculated wing margin the price was $38.97 and when Calculated using mark up the price is $34.2. The difference is because of basis of Calculation for both amount is different pre. Cost & sales price