Question

Two competing jewelry stores are selling the same type of diamond earrings.Each store buys the earrings for a unit cost of $409. Store #1 has lower operating costs than the second store because they have cheaper rent. Store #1's operating expenses are 6% of the cost.Store #2's operating expenses are $28. If store #1 has marked the price of the earrings up by $90, and store #2 has a rate of markup of 28% , which store is making a larger profit, and by how much ? ( the answer is store #2, $18) Please need the correct formula to give me that answer.. that is the correct answer and your formula should match. thank you !

Answer 1

Store 1 : Marked price = $(409+90) = $499.

Cost price = $[409+(409*6%)] = $[409+(409*0.06)] = $433.54

Then, expected profit = Marked price - Cost price = $[499-433.54] = $65.46

Store 1 : Marked price = $[409+(409*28%)] = $[409+(409*0.28)] = $523.52

Cost price = $[409+28] = $437

Then, expected profit = Marked price - Cost price = $[523.52-437] = $86.52

Therefore, store 2 is making a larger profit and the amount is = $(86.52-65.46) = $21.06

I assure that there is no mistake in my method. I think either the answer is wrong or there is any mistake in your data.