Drewrey's Market pays $0

Business Dec 09, 2020

Drewrey's Market pays $0.30 per pound for 300 pounds of peaches. On average, 5% of the peaches will spoil before they sell. Find the selling price per pound needed to obtain a 180% markup on cost.

Expert Solution

When we calculate the markup, we must take the normal spoilage into account:

Total Cost for 300 pounds	$90
Sellabe pounds	285 (300 x 0.95)
Cost per sellable pound	$0.31
Markup	180% on cost
Markup per pound	$0.57
Selling price per pound	$0.88

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