The Mills Lunch Shop prepares fresh take-out entrees each day. On Tuesday, 40 baked chicken dinners were prepared at a cost of $3.20 each. A 20% spoilage rate is anticipated. Mills Lunch Shop sells the dinners at an 80% markup based on cost. They decided to offer a $1.00-off coupon in a newspaper advertisement. What markdown percentage does this coupon represent?
cost: 40*3.20 = 128.00
after spoilage there are only 32 dinners to sell
Now, if the 32 dinners are supposed to cover the entire cost + 80% markup, that would mean they must sell at a price p such that
32p = 1.80*128
p = 7.20
So, the $1 discount is a 13.9% discount off the marked price.
To find the markdown percentage represented by the $1.00-off coupon, we first need to calculate the selling price of the baked chicken dinners and then determine the discount amount represented by the coupon.
Here's how we can go about it:
Step 1: Calculate the selling price of the baked chicken dinners:
The cost of each baked chicken dinner is $3.20.
The anticipated spoilage rate is 20%, which means 20% of the dinners will not be sold.
Therefore, the number of dinners to be sold is 80% of the total prepared.
Number of dinners to be sold = 40 (total prepared) * 80% = 40 * 0.8 = 32 dinners.
The selling price is based on an 80% markup on the cost, so the selling price per dinner will be:
Selling price per dinner = Cost per dinner + Markup amount
Markup amount = 80% of the cost per dinner = 0.80 * $3.20 = $2.56
Therefore, the selling price per dinner = $3.20 + $2.56 = $5.76.
Step 2: Determine the discount amount represented by the $1.00-off coupon:
The coupon offers a $1.00 discount per dinner.
Step 3: Calculate the markdown percentage:
To find the markdown percentage, we need to compare the discount amount ($1.00) to the original selling price ($5.76).
Markdown percentage = (Discount amount / Original selling price) * 100%
= ($1.00 / $5.76) * 100%
≈ 0.1736 * 100%
≈ 17.36%
Therefore, the $1.00-off coupon represents a markdown percentage of approximately 17.36%.