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While she was at the store, it purchased 797 dress shirts that were listed for $78 each less trade discounts of 12%, 5%, and 4% from FXFusion in Vancouver
While she was at the store, it purchased 797 dress shirts that were listed for $78 each less trade discounts of 12%, 5%, and 4% from FXFusion in Vancouver. The store's operating expenses are 26% of cost and markup is 53% of cost.
The store sold 481 shirts at the regular selling price. During a sale, it offered a markdown of 12% and sold another 248 shirts. It sold another 68 shirts at the break-even price.
Using your break-even price and regular selling price calculated in the previous questions, what would the rate of markdown have to be to reduce the selling price to the breakeven price
Expert Solution
Computation of the rate of markdown:-
Total dresses = 797
After trade discount the price is = Listed price * (1 - 12%) * (1 - 5%) * (1 - 4%)
= $78 * 88% * 95% * 96%
= $62.60
Regular selling price = $62.60 * (1 + 53%)
= $95.78
Total cost per shirt = $62.60 * (1 + 26%)
= $78.88
Break even price per shirt = $78.88
Rate of markdown = (Regular selling price - Break even price pet shirt) / Regular selling price
= ($95.78 - $78.88) / $95.78
= $16.90 / $95.78
= 17.65%
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