Question

A buyer for BestBuy is negotiating with a manufacturer to purchase an order of edge-lit 58 inch 3D LED televisions. She negotiates a price of $1,315. BestBuy marks up this category of television by 32% of cost. BestBuy has determined that the price point for this TV will be $1,775. Assume that the buyer signs the contract and that BestBuy sells the TV for $1,775. Based on the negotiated price, BestBuy's required markup and the customer price point, by how much will BestBuy be exceeding (+) or falling short (−) of it's desired markup? Round your answer to the nearest dollar.

Answer 1

BestBuy will exceed its desired 32% markup by $39 when selling the television for $1,775, considering its cost price of $1,315.

Step-by-step explanation:

The student is asking how much BestBuy will exceed or fall short of its desired markup when selling a television. To answer this question, we calculate BestBuy’s actual markup on the television and compare it to the desired 32% markup.

First, we determine the desired markup in dollars by applying the 32% markup to the negotiated price:

Desired markup = $1,315 × 32% = $420.80

Next, we find the selling price by adding the desired markup to the cost price:

Selling price = Cost + Markup = $1,315 + $420.80 = $1,735.80

Now, we compare this selling price to the actual selling price to find out how much BestBuy will exceed or fall short of the desired markup:

Difference = Actual selling price - Desired selling price = $1,775 - $1,735.80 = $39.20

We round this to the nearest dollar, which gives us $39 as the amount by which BestBuy exceeds its desired markup.