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Retail Math Applications and Discounts

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10 views2 pages

Retail Math Applications and Discounts

Uploaded by

ssstran440
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

ATF31303 APPLICATIONS OF MATHEMATICS AND STATISTICS IN BUSINESS

TUTORIAL 3
MATHEMATICS OF RETAILING

PART A: BUYING

1. A textile manufacturer requires RM 120 to cover the cost and ensure a profit when selling
fabric. At what price should the fabric be listed if a discount of 35% is to be applied?

2. A wholesale distributor offers laptops at a list price of RM3,000.00 less successive


discounts of 30%, 15%, and 5%. Calculate the:
i. Final net price;
ii. Total amount of discount
iii. Single equivalent rate of discount

3. A bookstore offers an additional RM 150 off the manufacturer's suggested retail price on a
popular novel set, claiming it represents a 40% discount. What is the original list price of
the novel set?

4. An exercise bike is advertised for RM 2,000 but sells for RM 1,300 after discounts. What is
the percentage discount offered on the bike?

5. Calculate the single equivalent discount rate for the following sets of multiple discounts:
i. 20%, 10%
ii. 25%, 10%, 5%

6. A specialty juicer is listed at RM 500. To clear inventory, a discount of RM 80 is applied for


purchases of 10 or more. An early bird discount of an additional RM 30 is offered for
purchases made within the first 48 hours. Determine the net price and overall discount
percentage if both discounts are applied.

7. A business receives three invoices with terms 5/10, 3/15 net 30:
RM 500 dated April 1
RM 600 dated April 15
RM 450 dated April 25 If all are paid by April 27, what is the total amount paid?

8. A furniture store receives an invoice for RM 12,000 dated June 20, with terms 2/10, n/60. The
furniture arrives on August 5. Determine the last possible day to take the early payment
discount and the amount to be paid if the discount is utilized.
ATF31303 APPLICATIONS OF MATHEMATICS AND STATISTICS IN BUSINESS

PART B: SELLING

1. SoundTech Company purchases headphones at a cost of RM 320.00 each. Operating


expenses are 20% of cost and the owner desires a profit of 15% of cost. At what price
should SoundTech Company sell these headphones?

2. GadgetCo bought two types of smartphones for resale. Model X costs RM 1,200 and
sells for RM 1,500. Model Y costs RM 2,000 and sells for RM 2,600. Business overhead is
18% of cost. For each model, determine:
i. The mark-up (or gross profit);
ii. The operating expenses (or overhead);
iii. The profit.

3. Basketball jerseys were purchased for RM 700 less 30% (for buying more than 50
items), and less an additional 15% (for purchasing during a seasonal promotion). They
were sold for RM 630.75.
i. What is the mark-up as a percent of cost?
ii. What is the mark-up as a percent of selling price?

4. Coral Reef Store sells aquatic plants for RM 150. The store's cost is RM 75, and the
operation expenses are 25% of the regular selling price. Calculate the profit on each
sale.

5. Novelty Books marks up novels by RM 4.50 per book. The store’s mark-up is 20% of cost.
i. For how much did Novelty Books purchase each book?
ii. What is the selling price of each book?
iii. What is the rate of mark-up, based on the selling price?

6. Winter Gear Shop purchased ski masks for RM 25 per piece. The masks are marked up
55% of the selling price.
i. At what price does Winter Gear Shop sell each ski mask?
ii. What is the rate of mark-up based on cost?

7. Ethan’s Camera Store sells a Canon camera for RM 3,250. The mark-up is 85% of cost.
i. How much does the store pay for this camera?
ii. What is the rate of mark-up based on selling price?

8. A fourteen-day Caribbean cruise is offered at a price of RM 3,200 per person based on


double occupancy. If booked three months in advance, the price is reduced to RM 2,560
per person. Calculate the markdown rate.

9. An energy bar is priced at RM 2.50 at North Store. At South Store, the same energy bar
sells for RM 4.00. What rate of markdown would South Store need to offer to match the
North Store price?

Common questions

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To calculate the selling price, you add the desired profit margin and the operating expenses as percentages of cost to 100%, which gives you 135% (100% + 20% + 15%). Multiply the cost (RM 320) by 1.35 to find the selling price: RM 320 * 1.35 = RM 432.

Calculating profit as a percentage of sales involves dividing the profit by the selling price, whereas calculating markup percentage involves dividing the profit by the cost price. For basketball jerseys purchased for RM 700 with two discounts that brought it to RM 415, and sold for RM 630.75, the markup percentage of cost would be (630.75 - 415) / 415 = 52%. Meanwhile, markup as a percentage of selling price is (630.75 - 415) / 630.75 = 34%.

Early payment discounts improve cash flow by reducing the amount needed for payments if paid early, freeing up cash for other uses. For a RM 12,000 invoice with terms 2/10, n/60, taking the 2% discount saves RM 240. Thus, the payment made by July 1 (10 days post-June 20) would be RM 11,760. This reduction allows the business to use the saved RM 240 for other immediate operational needs.

The single equivalent rate of discount can be found by multiplying the complements of the successive discount rates: 0.70 (30% off), 0.85 (15% off), and 0.95 (5% off). The complement of the total discount is 0.70 * 0.85 * 0.95 = 0.56575, which means the single equivalent rate of discount is 1 - 0.56575 = 0.43425, or 43.425%.

To compute the final price, first calculate the amount with early payment discounts. For the RM 500 and RM 600 invoices within 10 days, apply a 5% discount (0.05 * RM 500 + 0.05 * RM 600 = RM 55), and for the RM 450 invoice within 15 days, apply a 3% discount (0.03 * RM 450 = RM 13.50). The total payment is the sum of invoice amounts minus the total discount: (500 + 600 + 450) - (55 + 13.5) = RM 1,481.50.

To find the original list price, you start by setting up the equation where the discount (RM 150) represents 40% of the original price (X). Thus, 0.40X = 150. Solving for X gives X = 150 / 0.40, which results in an original list price of RM 375.

The markdown rate is calculated by subtracting the reduced price from the original price and dividing by the original price. For the cruise, subtract RM 2,560 from RM 3,200 to get a markdown of RM 640. Then, divide this by the original price: 640 / 3200 = 0.2, or a 20% markdown rate.

To determine the list price ensuring profit after a 35% discount, first establish that RM 120 covers cost and desired profit. The list price L should be such that 65% of it (100% - 35% discount) equals at least RM 120. Solve the equation 0.65L = 120. Calculate L = 120 / 0.65 to find the list price, which comes to approximately RM 184.62.

When combining multiple discounts, each subsequent discount is applied to the reduced price resulting from the previous discount. For the specialty juicer, apply the RM 80 discount first (RM 500 - 80 = RM 420), then the RM 30 early bird discount to the reduced price (RM 420 - 30 = RM 390), resulting in a final net price of RM 390. The overall percentage discount is derived from the total reduction in price from the original RM 500, which is (500 - 390) / 500 = 22%.

To match competitive pricing, a store must calculate the markdown needed to meet or beat competitor prices. For energy bars priced at RM 4.00, compared to RM 2.50 at another store, the markdown required is (4.00 - 2.50) / 4.00 = 0.375, or 37.5%. By offering this markdown, South Store aligns its price with North Store.

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