A. Epicure Market prepares fresh gourmet entrees each day. On Wednesday, 80 baked chicken dinners were made at a cost of $3.50 each. A 10% spoilage rate is anticipated. At what price should the dinners be sold to achieve a 60% markup based on selling price?
B.Using the price per dinner that you determined in the previous question, calculate the following. If Epicure offers a $1-off coupon in a newspaper advertisement, what markdown percent does the coupon represent? (Round percent to the nearest tenth.)
To solve this problem, we need to break it down into two parts.
A. To determine the selling price of the dinners, we first need to calculate the cost per dinner.
Cost per dinner = Cost of making the dinners / Number of dinners made
Cost per dinner = (80 * $3.50) = $280
Next, we need to account for the anticipated spoilage rate of 10%. This means that 10% of the dinners will not be sold and will be considered a loss.
Adjusted number of dinners = Number of dinners made - (Number of dinners made * Spoilage rate)
Adjusted number of dinners = 80 - (80 * 0.10) = 80 - 8 = 72 dinners
Now, let's calculate the desired markup based on selling price.
Selling price = Cost per dinner * (1 + Markup percentage)
Selling price = $280 * (1 + 0.60) = $280 * 1.60 = $448
Therefore, the dinners should be sold for $448 to achieve a 60% markup based on the selling price.
B. To calculate the markdown percent represented by the $1-off coupon, we need to compare the coupon amount with the selling price determined in question A.
Markdown amount = Selling price - Coupon amount
Markdown amount = $448 - $1 = $447
Markdown percentage = (Markdown amount / Selling price) * 100
Markdown percentage = ($447 / $448) * 100 = 99.7777... ≈ 99.8%
Therefore, the $1-off coupon represents a markdown percentage of approximately 99.8%.