Amy is looking for the best deal on a king-size mattress that has a wholesale price of
$479
. Help her compare the price of the mattress in different situations by completing the following.
(a) Amy can go to a specialty store that she knows has the mattress. This specialty store gets it from a distributor who marks up the wholesale price
20%
. Then the specialty store marks it up by an additional
60%
. Ignoring tax, how much would Amy pay for the mattress at this specialty store?
$
(b) Amy can also buy the mattress from a distributor that does direct-to-customer sales. When selling directly to individual customers, this distributor marks up the wholesale price
80%
. Ignoring tax, how much would Amy pay for the mattress if she gets it from this distributor?
$
(c) Select the true statement.
Amy would pay less for the mattress if she gets it at the specialty store.
Amy would pay less for the mattress if she gets it directly from the distributor.
Amy would pay the same amount if she gets the mattress from the distributor or at the specialty store.
(a) Amy would pay $955.20 at the specialty store.
To calculate:
- The distributor marks up the wholesale price of $479 by 20%, which results in an additional cost of $95.80 ($479 x 0.20 = $95.80).
- The specialty store then marks up the price of $574.80 (original cost of $479 plus the distributor markup) by 60%, which results in an additional cost of $344.88 ($574.80 x 0.60 = $344.88).
- Adding the two markup costs to the original wholesale price, Amy would pay a total of $955.20 ($479 + $95.80 + $344.88 = $955.20).
(b) Amy would pay $862.40 from the distributor.
To calculate:
- The distributor marks up the wholesale price of $479 by 80%, which results in an additional cost of $383.20 ($479 x 0.80 = $383.20).
- Adding the markup cost to the original wholesale price, Amy would pay a total of $862.40 ($479 + $383.20 = $862.40).
(c) Amy would pay less for the mattress if she gets it directly from the distributor.
(a) To find the price of the mattress at the specialty store, we need to apply the markup percentages.
First, the distributor marks up the wholesale price by 20%.
New price at the distributor: $479 + ($479 * 0.20) = $479 + $95.8 = $574.8
Next, the specialty store marks up the price by an additional 60%.
Final price at the specialty store: $574.8 + ($574.8 * 0.60) = $574.8 + $344.88 = $919.68
So, Amy would pay $919.68 for the mattress at the specialty store.
(b) To find the price of the mattress from the distributor that does direct-to-customer sales, we need to apply the markup percentage.
The distributor marks up the wholesale price by 80%.
Price from the distributor: $479 + ($479 * 0.80) = $479 + $383.2 = $862.20
So, Amy would pay $862.20 for the mattress if she gets it from this distributor.
(c) The true statement would be: Amy would pay less for the mattress if she gets it at the specialty store. The final price at the specialty store was $919.68, while the price from the distributor was $862.20.