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## #1 2005-11-12 13:34:09

Nestea
Member
Registered: 2005-11-12
Posts: 9

### The average rate of markup

Cantu Excavating Liquidators bought 350 coats at \$80.00 each. In the first month, 175 were sold at the regular price of \$192.00 each. Another 152 were sold in the second month at a "one-third-off" sale price. The remaining stock, consisting primarily of defective units, were cleared out in the third month at \$75.00 each. The store's overhead is 50% of cost.

a) What was the average rate of markup?

Could anyone tell me the technique on this?!??!?!?!?!?
Help me find the Total cost for each month?

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## #2 2005-11-12 17:23:31

MathsIsFun
Administrator
Registered: 2005-01-21
Posts: 7,664

### Re: The average rate of markup

Bought: 350 × \$80 = \$28,000

Sold:
175 × \$192.00 = \$33,600
152 × (\$192.00)×(1-(1/3)) = 152 × \$192×(2/3) = 152 × \$128 = \$19,456
(350-175-152) × \$75.00 = 23 × \$75.00 = \$1,725
Total Sold = \$54,781

a) What was the average rate of markup?
OK, here we need to define what markup is. I think of it as price vs marginal cost ... in other words excluding overheads:

Average rate of Markup = \$54,781 / \$28,000 = 1.956 = 196% (markup is usually expressed as a percentage)

[ If you must include overheads you would increase the cost base by 50%.  \$28,000 plus 50% = \$28,000 × 150% = \$42,000, and the markup would be: \$54,781 / \$42,000 = 1.304 = 130% ]

Total cost per month:
Easiest way is to determine cost per unit: \$80 plus 50% = \$80 × 150% = \$120

175 × \$120 = \$21,000
152 × \$120 = \$18,240
23 × \$120 = \$2,760

"The physicists defer only to mathematicians, and the mathematicians defer only to God ..."  - Leon M. Lederman

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## #3 2005-11-13 05:54:43

Nestea
Member
Registered: 2005-11-12
Posts: 9

### Re: The average rate of markup

THanks for the help! But the third month's cost is a negative price.

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