Question

Edward's Electronics is a small electronics store selling a variety of electronics equipment. It has a small but progressive camera department. Since Edward's does not sell very many cameras during the year, it only has a small number in stock. Edward's has just ordered six of the new digital cameras from Nikon. Edward's owner has been told that the cost of each camera will be $170, with terms 2/15,n/30. The manufacturer's suggested retail price (MSRP) of each camera is $400. Edward's owner calculates that the overhead is 15% of the MSRP and that the desired profit is 18% of the MSRP. Staples Canada has a large camera shop in its store in the mall in the same town. It has ordered 70 of the same cameras from Nikon.

Staples has been offered both a cash discount and a quantity discount off the list price of $170. The cash discount is 3/20,n/45, while the quantity discount is 3.5\%. Staples estimates its overhead is 25% of the MSRP and it would like to make a profit of 35% of the MSRP.

What is the cost per camera (ignoring taxes) for edward’s electronics and for staples?

Answer 1

Edward's Electronics' cost per camera is $302, while Staples' cost per camera is $158.95. Edward's Electronics pays $170 per camera, while Staples pays $138.55 per camera after applying a cash discount of 3/20 and a quantity discount of 3.5%.

Step-by-step explanation:

Edward's Electronics' cost per camera will be determined by various factors including the cost of the camera, overhead costs, and desired profit. For Edward's, the cost of each camera is $170. To calculate the actual cost per camera, we need to consider the overhead and profit percentage on the manufacturer's suggested retail price (MSRP). The overhead is 15% of the MSRP ($400), which amounts to $60. The desired profit is 18% of the MSRP, which amounts to $72. Adding the cost of the camera, overhead, and desired profit, the total cost per camera for Edward's Electronics is $170 + $60 + $72 = $302.

Staples Canada, on the other hand, has negotiated both a cash discount and a quantity discount from the list price of $170. The cash discount is 3/20, n/45, which means a 3% discount if paid within 20 days, or the full amount due within 45 days. The quantity discount is 3.5% off the list price. To calculate the cost per camera for Staples, we need to deduct both discounts from the list price. The cash discount amounts to $5.10 ($170 x 3%), and the quantity discount amounts to $5.95 ($170 x 3.5%). Subtracting these discounts from the list price, the cost per camera for Staples is $170 - $5.10 - $5.95 = $158.95.

Edward's Electronics pays $170 per camera, while Staples pays $138.55 per camera after applying a cash discount of 3/20 and a quantity discount of 3.5%.

The cost per camera for Edward's Electronics is easy to calculate since there are no discounts involved. The cost is simply the price given by the supplier, which is $170. In contrast, Staples receives both a cash discount and a quantity discount. The cash discount is 3/20 of the $170, which calculates to $25.50, reducing the price to $144.50. The quantity discount is an additional 3.5% off of the $170, which is $5.95, reducing the consequently discounted price to $138.55 per camera.