Answer to Question #119336 in Financial Math for Komalpreet

Question

Question #119119
Running a small pen shop in Vancouver you purchase 100 boxes of blue pens from Ink Inc. at a trade discount of 20%. You receive an invoice for your order on March 15 in the amount of $2050 with terms of 2/10, n/30. You completely pay the invoice on March 25. Your accountant has suggests that you should incorporate unit overhead costs of 30% of cost to all of your stock. Also, you should set the price so that operating profit is 20% of cost, if the stock is sold at a 25% discount. What is the regular selling price of a box of fancy pens?

Answer 1

1.payment on March 25 with a 2% discount with terms of 2/10, n/30:

$2050-2050\times0.02=2050-41=2009$

2.include overhead:

$2009+2009\times0.3=2009+602.7=2611.7$

3.lay profit is 20% of cost, if the stock is sold at a 25% discount:

$2611.7+(0.45-0.25)\times 2611.7=3134.04$

3.determine the price

$\frac{3134.04}{100}=31.34$