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 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? Round to nearest tenth of a percent
Cost = 40*3.20 + 0.2*40*3.26 = $153.60
P=153.6 + 0.8*153.6 = $276.48 = Selling
price for 40 dinners.
276.48/40 = $6.91 Each.
(6.91-1.00)/6.91 = 85.5%
% Markdown = 100%-85.5% = 14.5%
Correction:
Cost = 40 * 3.20 = $128
A = 128 + 0.8*128 = $230.40 = Amt. to be
received.
(40-8)dinners * $D/dinner = 230.40
32D = 230.40
D = $7.20/dinner.
(7.20-1.00)/7.20 = 0.861 = 86.1%
% Markdown = 100 - 86.1 = 13.9
To calculate the markdown percentage represented by the $1.00 off coupon, you need to determine the original selling price of the baked chicken dinners.
First, calculate the total cost of preparing 40 baked chicken dinners by multiplying the quantity (40) by the cost per dinner ($3.20):
Total cost of 40 chicken dinners = 40 * $3.20 = $128.00
Next, calculate the anticipated spoilage rate by multiplying the total cost by the spoilage rate percentage (20%):
Spoilage cost = $128.00 * 0.20 = $25.60
Now subtract the spoilage cost from the total cost to get the actual cost:
Actual cost = $128.00 - $25.60 = $102.40
To calculate the selling price, add an 80% markup to the actual cost:
Selling price = Actual cost + (80% * Actual cost)
Selling price = $102.40 + (0.8 * $102.40) = $102.40 + $81.92 = $184.32
Now, subtract the $1.00 off coupon from the selling price to find the discounted price:
Discounted price = Selling price - $1.00
Discounted price = $184.32 - $1.00 = $183.32
Finally, calculate the markdown percentage by finding the difference between the original selling price and the discounted price, divided by the original selling price, and then multiplying by 100:
Markdown percentage = ((Selling price - Discounted price) / Selling price) * 100
Markdown percentage = (($184.32 - $183.32) / $184.32) * 100 ~= (1 / $184.32) * 100 ~= 0.5421%
Therefore, the markdown percentage represented by the $1.00 off coupon is approximately 0.5%. Rounding to the nearest tenth of a percent, it would be 0.5%.