Question

You are 30 minutes into your final one-hour interview for a sales specialist role working for the San Francisco headquartered health and fitness company Fitbit. Everything has gone smoothly and you can feel your excitement building at the prospect of accepting a dream job working for a cool company on the west coast. During the earlier phases of the interview process, your hiring manager, Winston Ono, made it clear that success in sales roles at Fitbit required analytic skills. He also set your expectations that a few “math” questions would likely be a part of your final interview with his manager, Regional Vice-President LaShonda Jones.

LaShonda has just handed you a sheet of paper with the below problem. She tells you to write your approach and solution on the white board in the interview room.

Dick’s Sporting Goods, the retail chain that you will be assigned for the first several months of your sales training period, buys Fitbit’s most popular product from you at $39.99, and takes a mark-up of 74.5%.

What is the selling price of the product to the consumer?

What would Dick’s total revenue and mark-up, in $US dollars, be if the retailer sold 50,000 Fitbit units during the next twelve months in all stores combined across the US?

Answer 1

A mark-up is essentially the profit percentage, calculated on the cost price. The price quoted by Fitbit viz. $39.99 is basically the cost to Dick’s Sporting Goods for the product. Hence, the selling price of the product to the consumer is 1.745 × $39.99 = $69.78

Total revenue = 50,000 × $69.78 = $3,489,000

Total mark-up = 74.5% of total cost = 0.745 × 50,000 × $39.99 = $1,489,000

There can be rounding errors in this solution. For ex, if we round off $39.99 as $40 then same answers shall be $69.80 , $3,490,000 and $1,490,000 respectively. Please use the convention as advised by your teacher.