Question

You manufacture hand-held blenders, which you sell to wholesalers, and in turn, they sell to retailers. You have developed a new blender. You know your competitor's product retails for $23 in houseware stores. You know yours is slightly better and are confident your product could sell for $27. Assuming a retail markup of 33% and a wholesale margin of 25%, a) what is the wholesaler's selling price to the nearest cent, and b) for how much to the nearest cent, can you sell the blenders to the wholesaler?

Answer 1

a) The wholesaler's selling price is $22.94. b) You can sell the blenders to the wholesaler for $20.25.

Step-by-step explanation:

a) To calculate the wholesaler's selling price, we need to first determine the retailer's selling price. Since the retail markup is 33%, we can calculate the retailer's selling price by adding 33% to the competitor's retail price of $23. This gives us a retailer's selling price of $30.59. Now, to calculate the wholesaler's selling price, we need to subtract the wholesale margin of 25% from the retailer's selling price. This gives us a wholesaler's selling price of $22.94 to the nearest cent.

b) To calculate the price at which you can sell the blenders to the wholesaler, we need to subtract the wholesale margin of 25% from your desired retail price of $27. This gives us a price of $20.25 to the nearest cent.