Question

2. Answer all three of the following questions (including all parts of 1, 2, and 3).
   1. If the price to the end customer for a product is $240, what is the manufacturer’s cost to produce if the manufacturer’s markup is 35%, the wholesaler’s markup is 50%, and the retailer’s markup is 200%? (3 pts.)
   2. Describe and explain the logo being used on the floor at the left hand entrance to the Ellensburg Safeway. Why is it at this particular entrance to the Safeway and not at the other entrance? In other words, how is this adding to customer value so that it is worth the expense? (2 pts.)
   3. Why are floral, bakery, meat, deli, and produce departments on the perimeter of the Ellensburg Safeway with the wide aisles and better lighting? In other words, why are these departments receiving special treatment? (1 pt.)

Answer 1

Answer to Question No. 1

We can understand from the question that,

- the manufacturer produced a product and sold to wholesaler at 35% markup;

- the wholesaler sold the same to retailer at 50% markup;

- the retailer sold the product to end customer at 200% markup.

The price at which the product is sold to end customer is $ 240.

Therefore, since the retailer's markup is 200%, the retailer's cost is equal to ($240/300%)*100% = $80

If $ 80 is retailer's cost, then the wholesaler's cost is equal to ($80/150%)*100% = $53.33

Similarly, if the wholesaler's cost is $53.33, then the manufacturer's cost is equal to ($53.33/135%)*100% = $39.51