A living room set lists for $10,800 and carries a trade discount of 20 percent. Freight (FOB shipping point) of $60 is not part of list price. The delivered price of the living room set including freight assuming a cash discount of 3 percent is:
To find the delivered price of the living room set, we need to follow these steps:
1. Calculate the trade discount: The trade discount is given as 20 percent. So, we can find the trade discount amount by multiplying the list price by 20 percent:
Trade discount = List price * Trade discount rate
= $10,800 * 0.20
= $2,160
2. Calculate the net price: The net price is the list price minus the trade discount:
Net price = List price - Trade discount
= $10,800 - $2,160
= $8,640
3. Add the freight cost: The freight cost is given as $60, and it is not part of the list price. Therefore, we need to add it to the net price:
Net price + Freight cost = $8,640 + $60
= $8,700
4. Calculate the cash discount: The cash discount is given as 3 percent of the delivered price. To find the cash discount amount, we can multiply the net price plus freight by 3 percent:
Cash discount = (Net price + Freight cost) * Cash discount rate
= $8,700 * 0.03
= $261
5. Calculate the delivered price: The delivered price is the net price plus freight cost minus the cash discount:
Delivered price = (Net price + Freight cost) - Cash discount
= $8,700 - $261
= $8,439
Therefore, the delivered price of the living room set, including freight and a cash discount of 3 percent, is $8,439.