Question

As part of a marketing plan, some businesses mark up their prices before they advertise a sales event. Some companies use this practice as a way to entice customers into the store without sacrificing their profits.

A furniture store wants to host a sales event to improve its profit margin and to reduce its tax liability before its inventory is taxed at the end of the year.
How much profit will the business make on the sale of a couch that is marked up by 1/3 and then sold at a 1/5 off discount if the original price is $2,400?

Answer 1

$160

Explanation:

Hi! First of all, the information we have is:

Original price: $2,400

Then, we could calculate the “marked up” Price as:

Marked up Price = $2,400 + $2,400*1/3 = $2,400 + $800 = $3,200

And from this “marked up” Price, we calculate the “sale Price” as:

Sale Price = $3,200 - $3,200*1/5 = $3,200 - $640 = $2,560

So the business sold the couch at $2,560

Then, if the original Price was $2,400, they make a profit of:

Profit = $2,560 - $2,400 = $160

Hope it helps!