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A retailer imports Bassetts Jelly Babies from the UK
A retailer imports Bassetts Jelly Babies from the UK. The price in the UK is 1.44 UKP. (Due to the Canada UK Free Trade Agreement, there is no duty payable on the product.) The exchange rate is $1.70. Due to the costs incurred to import the product to Canada, the retailer uses the 57.20 %. As a result of the post-Brexit chaos in the UK, the UK currency loses value and the rate changes to $1.43. The retailer wants to try to make a bit more profit on its sales of Jelly Babies, and so has a 58.20 %.
You need to calculate the following.
-The original cost price in CAD
-The original retail price in CAD
-The new cost price in CAD
-The new retail price in CAD
Expert Solution
- The original cost price in CAD
- According to the given inrerest rate, 1UKP = CAD1.7
- Therefore, 1.44 UKP = 1.44 x 1.7 = CAD2.448
- The original retail price in CAD
- If the margin is 57.20% then the retail price = Cost x (1+57.20%)
- Retail price = 2.449 x (1+57.20%)
- Retail price = CAD 3.848
- The new cost price in CAD
- According to the given inrerest rate, 1UKP = CAD1.43
- Therefore, 1.44 UKP = 1.44 x 1.43 = CAD2.059
- The new retail price in CAD
- If the margin is 57.20% then the retail price = Cost x (1+58.20%)
- Retail price = 2.059 x (1+58.20%)
- Retail price = CAD 3.258
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