Arley’s Bakery makes fat-free cookies that cost $1.90 each. Arley expects 20% of the cookies to fall apart and be discarded. Arley wants a 50% markup on cost and produces 200 cookies. What should Arley price each cookie? (Round your answer to the nearest cent.)
To calculate the price that Arley should charge for each cookie, we need to follow a few steps.
Step 1: Calculate the cost per cookie.
Given that the fat-free cookies cost $1.90 each, we need to find out the total cost for producing 200 cookies.
Total cost = Cost per cookie * Number of cookies
Total cost = $1.90 * 200 = $380
Step 2: Account for the cookies that will be discarded.
Arley expects 20% of the cookies to fall apart and be discarded. Therefore, we need to subtract this percentage from the total number of cookies.
Number of cookies after discarded = Number of cookies - (Percentage discarded * Number of cookies)
Number of cookies after discarded = 200 - (0.20 * 200) = 200 - 40 = 160
Step 3: Calculate the final price with markup.
Arley wants a 50% markup on the cost. To find the selling price per cookie, we add this markup to the cost per cookie.
Markup = Percentage markup * Cost per cookie
Markup = 0.50 * $1.90 = $0.95
Selling price per cookie = Cost per cookie + Markup
Selling price per cookie = $1.90 + $0.95 = $2.85
Therefore, Arley should price each cookie at $2.85 (rounded to the nearest cent).
You need to do this in steps.
1) Figure out how many cookies you get when 20% must be discarded
2) Take the remaining cookies and work on the mark up.
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