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Thread: Please Help with Cost, Volumn, Profits and Trade Discount

  1. #1
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    Question Please Help with Cost, Volumn, Profits and Trade Discount

    Hello everyone,

    I have tried to solve the questions below, but I'm not sure if they are correct. Please help. Thank you.
    --------------------------------------------------------------------

    1/ The Scarlet Letter bookstore has $85 000 of sales, variables costs of $36 550, and fixed costs of $27 360. What would it sales have to be to break even?

    Variable cost/total revenue 36550/85000 = 0.43
    1.00X = 27360 + 0.43X
    X=48000

    2/ Rover's Friends provides dog washing services. For each dog, supplies cost $3 and wages are $5. To provide this service, a special room and equipment are needed, at a cost of $300 per month. Rover's Friends maintains an average of $30 dogs washed each month. What must Rover's Friends charge as a price for the dog washing service to break even?

    Variable cost = 3 + 5 = 8, fixed cost = 300.
    (SP*30) = 30 + (8*30)
    30SP=540
    SP=18

    3/ The Peel Trading Company received an invoice dated September 20 for $16000 less 25% and 20%, terms 5/10, 2/30, n/60. Peel made a payment on September 30 to reduce the debt to $5000 and a payment on October 20 to reduce the debt by $3000. (a) What amount must Peel remit to pay the balance of the debt at the end of the credit period? (b) What is the total amount paid by Peel?

    (a) 16000(1-0.25)(1-0.20) = 9600

    (b) 9600-5000 = 4600
    4600(1-0.05) = 4370 paid
    9600-4600=5000 balance

    5000-3000= 2000 balance
    3000(1-0.02)= 2940 paid
    The total amount paid by Peel was 4370 + 2940 = 7310

    4/ Using a markup of 35% of cost, a store priced a book at $8.91. (a) What was the cost of the book? (b) What is the markup as a percent of selling price?

    (a) Selling price = cost + markup, cost = C
    8.91 = C + 0.35C
    8.91 = 1.35C
    C=6.6

    (b) 6.6(0.35) = 2.31
    2.31/8.91 = 25.9%
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  2. #2
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    Re: Please Help with Cost, Volumn, Profits and Trade Discount

    Quote Originally Posted by isuck View Post
    Hello everyone,

    I have tried to solve the questions below, but I'm not sure if they are correct. Please help. Thank you.
    --------------------------------------------------------------------

    1/ The Scarlet Letter bookstore has \$85 000 of sales, variables costs of \$36 550, and fixed costs of \$27 360. What would it sales have to be to break even?

    Variable cost/total revenue 36550/85000 = 0.43
    1.00X = 27360 + 0.43X
    X=48000

    2/ Rover's Friends provides dog washing services. For each dog, supplies cost \$3 and wages are \$5. To provide this service, a special room and equipment are needed, at a cost of \$300 per month. Rover's Friends maintains an average of 30 dogs washed each month. What must Rover's Friends charge as a price for the dog washing service to break even?

    Variable cost = 3 + 5 = 8, fixed cost = 300.
    (SP*30) = 30 + (8*30)
    30SP=540
    SP=18

    3/ The Peel Trading Company received an invoice dated September 20 for \$16000 less 25% and 20%, terms 5/10, 2/30, n/60. Peel made a payment on September 30 to reduce the debt to \$5000 and a payment on October 20 to reduce the debt by \$3000. (a) What amount must Peel remit to pay the balance of the debt at the end of the credit period? (b) What is the total amount paid by Peel?

    (a) 16000(1-0.25)(1-0.20) = 9600

    (b) 9600-5000 = 4600
    4600(1-0.05) = 4370 paid
    9600-4600=5000 balance

    5000-3000= 2000 balance
    3000(1-0.02)= 2940 paid
    The total amount paid by Peel was 4370 + 2940 = 7310

    4/ Using a markup of 35% of cost, a store priced a book at \$8.91. (a) What was the cost of the book? (b) What is the markup as a percent of selling price?

    (a) Selling price = cost + markup, cost = C
    8.91 = C + 0.35C
    8.91 = 1.35C
    C=6.6

    (b) 6.6(0.35) = 2.31
    2.31/8.91 = 25.9%
    reposted to escape dollar signs
    Last edited by romsek; Oct 5th 2016 at 08:56 PM.
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  3. #3
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    Re: Please Help with Cost, Volumn, Profits and Trade Discount

    Thank you so much, Romsek.
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  4. #4
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    Re: Please Help with Cost, Volumn, Profits and Trade Discount

    1 and 2 are correct. I may have time to look at the rest later.
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  5. #5
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    Re: Please Help with Cost, Volumn, Profits and Trade Discount

    Thank you Romsek. Hopefully, the other two are also right but I doubt it.
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  6. #6
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    Re: Please Help with Cost, Volumn, Profits and Trade Discount

    4 looks correct. I don't understand question 3.
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  7. #7
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    Re: Please Help with Cost, Volumn, Profits and Trade Discount

    The question three is very confusing, especially the part a. Hopefully someone know the correct answer .
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  8. #8
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    Re: Please Help with Cost, Volumn, Profits and Trade Discount

    There's NO correct answer, only guesses.
    Depends on rules applied to partial payments.
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