Question

You are the deli manager for a large grocery store. Every two days you make 100 pre-made meals to restock the shelves. You estimate that 20% will expire before you are able to sell them. It costs you $2.35 to make each meal and you are expected to achieve a 50% markup on cost?

At what price should the meals be sold?

Answer 1

Here we have to take into consideration the cost of all 100 meals as 20% is wasted and then add waste expenses

A. Cost of Goods Sold = 100 * 2.35 = 235

B. Wastage Cost = 20% of all packets = 0.2 * 2.35 = 47

We are adding the waste cost in the cost itself because it is expected that this would be wastage and thus to get a 50% markup over the total cost we must add it to the cost of each unit thus total Cost = A + B = 282

Thus to get 50% markup = 282 * 1.5 = 423

Thus for 100 meals it would $ 423 as Sales Price so each meal should be sold at 423/100 = $4.23