The sweet candy shop buys 600 pounds of chocolate covered strawberries at $5.59 per pound. If a 10% spoilage rate is anticipated, at what price per pound should the strawberries be sold in order achieve a 60% markup based on cost?
Answer: $9.94/pound
Shop paid: 600 lbs X $5.59 = $3,354
Assuming 10% spoilage, shop really purchased only 540 lbs at a total cost of $3,354
The cost to the shop including the spoilage = $6.21/lb
60% markup = $9.94/lb
To find the price per pound at which the strawberries should be sold in order to achieve a 60% markup based on cost, we need to follow these steps:
1. Calculate the total cost of the strawberries purchased:
Total Cost = Amount of strawberries purchased * Cost per pound
Total Cost = 600 pounds * $5.59 per pound
2. Determine the anticipated spoilage rate:
Spoilage Rate = 10%
This means that 10% of the strawberries purchased will be spoiled and cannot be sold.
3. Subtract the anticipated spoilage from the total amount of strawberries to find the amount available for sale:
Strawberries available for sale = Amount of strawberries purchased - (Spoilage Rate * Amount of strawberries purchased)
Strawberries available for sale = 600 pounds - (10% * 600 pounds)
4. Calculate the cost of strawberries per pound after considering the anticipated spoilage:
Cost per pound after spoilage = Total Cost / Strawberries available for sale
5. Calculate the desired selling price per pound with a 60% markup based on the cost:
Selling Price per pound = Cost per pound after spoilage + (60% * Cost per pound after spoilage)
Let's calculate the values:
1. Total Cost = 600 pounds * $5.59 per pound = $3,354
2. Spoilage Rate = 10%
3. Strawberries available for sale = 600 pounds - (10% * 600 pounds) = 540 pounds
4. Cost per pound after spoilage = $3,354 / 540 pounds = $6.20 per pound
5. Selling Price per pound = $6.20 per pound + (60% * $6.20 per pound) = $6.20 per pound + $3.72 per pound = $9.92 per pound
Therefore, the strawberries should be sold at a price of $9.92 per pound in order to achieve a 60% markup based on cost.