Craig runs a business importing shoes from Italy and selling them in Namibia.
For the below questions (a – g), rounds your answers to cents (two decimal places).
a) If the Euro / Namibian dollar exchange rate is € 1 = N$ 13.90 and the cost price of a
pair of shoes is € 15.00, how much is the cost price of a pair of shoes in N$?
b) Craig decides to put a mark-up of 20% on the cost price of the shoes. How much
will he try to sell the shoes for (in N$)?
c) It costs Craig N$ 13.50 per pair of shoes to transport the shoes from Italy to
Namibia. In addition, Craig has to pay 10% import tax on the cost price of each pair
of shoes. What are Craig’s total expenses per pair of shoes?
d) Craig has a fixed cost of N$ 5,000 per month to run the business. How many pair of
shoes must Craig sell in a month to make a profit?
answers
a N$208.50. b N$250.20 c N$ 242.85 d?
To answer these questions, we need to follow the given information and apply some calculations. Let's go step by step:
a) To find the cost price of a pair of shoes in Namibian dollars (N$), we need to multiply the cost price in euros by the exchange rate. Given that the exchange rate is €1 = N$13.90 and the cost price is €15.00, the calculation is as follows:
Cost price in N$ = Cost price in euros * Exchange rate
Cost price in N$ = €15.00 * N$13.90
Now let's calculate this:
Cost price in N$ = €15.00 * 13.90 = N$208.50
Therefore, the cost price of a pair of shoes in Namibian dollars is N$208.50.
b) To calculate the selling price, we need to add a 20% markup to the cost price. The markup is calculated by multiplying the cost price by 20% (which is 0.20) and then adding it to the cost price.
Markup = Cost price * 0.20
Selling price = Cost price + Markup
Using the cost price we found in question a):
Markup = N$208.50 * 0.20 = N$41.70
Selling price = N$208.50 + N$41.70
Now let's calculate this:
Selling price = N$250.20
Therefore, Craig will try to sell the shoes for N$250.20.
c) To calculate Craig's total expenses per pair of shoes, we need to consider the transportation cost and the import tax. The transportation cost is given as N$13.50 per pair of shoes.
The import tax is calculated by multiplying the cost price by 10% (which is 0.10).
Total expenses per pair of shoes = Transportation cost + Import tax
Using the cost price we found in question a):
Transportation cost = N$13.50
Import tax = N$208.50 * 0.10
Now let's calculate this:
Import tax = N$20.85
Total expenses per pair of shoes = N$13.50 + N$20.85
Therefore, Craig's total expenses per pair of shoes are N$34.35.
d) To calculate how many pairs of shoes Craig must sell in a month to make a profit, we need to consider the fixed cost of running the business and the profit per pair of shoes.
The profit per pair of shoes is calculated by subtracting the total expenses per pair of shoes (found in question c) from the selling price (found in question b).
Profit per pair of shoes = Selling price - Total expenses per pair of shoes
Using the selling price and total expenses per pair of shoes we found in questions b) and c):
Profit per pair of shoes = N$250.20 - N$34.35
Now let's calculate this:
Profit per pair of shoes = N$215.85
To calculate the number of pairs of shoes Craig must sell to make a profit, we need to divide the fixed cost of running the business (N$5,000) by the profit per pair of shoes.
Number of pairs of shoes to sell = Fixed cost / Profit per pair of shoes
Now let's calculate this:
Number of pairs of shoes to sell = N$5,000 / N$215.85
Therefore, Craig must sell approximately 23 pairs of shoes in a month to make a profit.