Question

A department store is selling microwaves bought from a manufacturer for $300, less a 15% trade discount. The store has marked the microwaves up by 27%. What is the selling price of the microwaves? If the store discounted the microwaves by 10% , what would the operating profit or loss be if overhead expenses are 8 % of the cost ? ( the answers are selling price $323.85 and profit of $16.07 ... please make sure ur formula matches answers, these answers are correct. thank you )

Answer 1

The purchase price of the microwaves for the department store is 85 % of $ 300 i.e. $ 255.00. The store has marked the microwaves up by 27% so that the selling price is 127% of $ 255 i.e. $ 323.85.

If the store discounted the microwaves by 10%, then the selling price would be 90 % of $ 323.85 i.e. $ 291.47 ( on rounding off to the nearest cent). The overhead expenses are 8 % of $ 255.00 i.e. $ 20.40. Thus, in this case, the operating profit would be $ 291.47 – ($ 255.00+$ 20.40) = $ 291.47 –$ 275.40 = $ 16.07.