Question

1.

A buyer for BestBuy is negotiating with a manufacturer to purchase an order of edge-lit 58 inch 3D LED televisions. She negotiates a price of $1,230. BestBuy marks up this category of television by 32% of cost. BestBuy has determined that the price point for this TV will be $1,755. Assume that the buyer signs the contract and that BestBuy sells the TV for $1,755. Based on the negotiated price, BestBuy's required markup and the customer price point, by how much will BestBuy be exceeding (+) or falling short (-) of it's desired markup? Round your answer to the nearest dollar.

Question 2

A buyer for BestBuy is negotiating with a manufacturer to purchase an order of edge-lit 58 inch 3D LED televisions. She negotiates a price of $1,255. BestBuy marks up this category of television by 25% of selling price. BestBuy has determined that the price point for this TV will be $1,700. Based on the negotiated price, BestBuy's required markup and the customer price point, by how much will BestBuy be exceeding (+) or falling short (-) of it's desired markup? Round your answer to the nearest dollar. In answering this question, calculate the selling price that would represent a 25% markup on that selling price, given the negotiated purchase price. Then compare that price to BestBuy's price point.

Answer 1

Markup is the difference between the selling price of a good and cost. It is usually expressed as a percentage over the cost until anything is not mentioned.

1. Desired Markup = 32% of cost = 32% of $1230 = $393.60

Desired selling price = cost + Markup = $1230 + $393.60 = $1623.60

Actual Selling price = $1755, hence BestBuy be exceeding the desired markup by $131.40 ( 1755-1623.40) i.e $134

2. Desired Markup (% over selling price as mentioned ) = 25% of $1700 = $425

Desired Selling price = Cost + Markup = $1255 + $425 = $1680

Actual Selling price = $1700, hence BestBuy be exceeding the desired markup by $20 (1700-1680).