Question

In downtown Boston, a bakery produces 200 bagels a day at a cost of $.20 each. It is expected the 25% of the bagels will spoil before being sold. Assuming the bakery expects to make 40% markup on its cost, what should the selling price of each bagel be?

Answer 1

Ans - $0.37 per bagel

Total cost of 200 bagels = ($0.20 X 200 bagels) = $40
Sale value of 200 bagels = (Total cost + Markup)
=> ($40 + 40%) = $56
But only 75% of total bagels will be good as 25% will spoil, so their value needs to be adjusted to selling price.

So, Selling price per bagel = [Total sale value / (Total bagels X 75%)]
=> [$56 / (200 bagesl X 75%)]
=> ($56 / 150 bagels)
=> $0.37 per bagel (Ans)

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