Posted by Tha on Monday, August 10, 2009 at 11:45pm.
Arithmetic is used to solve the problem although algebra can also be used.
Cost price = $19.50- 19.50*0.40 = $11.70
The selling price includes
- 33 1/3 % of overhead
- 10 % of profit
So the fraction of cost in selling price
= 100% - 33 1/3 - 10 = 56 2/3%
Therefore selling price
= cost / fraction of cost
= $11.70 / (56 2/3%)
= $11.70 / (170/300)
= $11.70 * 300/170
= $20.65
Check:
Profit (10%) = 20.65*0.1 = $2.07
Overhead (33 1/3%) = 20.65*(1/3)= 6.88
Cost price = 20.65-2.07-6.88=11.70
So the answer is correct.
(b) the mark-up on cost is the profit divided by the cost price. It should be different from 33 1/3%.
(c) the break even price is the selling price less the profit, i.e. zero profit.
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