Question

A firm pays ​$52 for a car seat and wants a 34​% markup for operating expenses as well as a 6​% markup for profit.​ However, customers think the car seats are​ ugly, so they are not selling. Management reduces the price of each car seat by ​$25 to get rid of them.

Answer 1

See Below

Explanation:

Initial cost = $52

Markup for operating expenses = 34%

$52 + 34% = $52*1.34 = $69.68

Markup for profit = 6%

69.68 + 6% = 69.68*1.06 = 73.86 (rounded)

a) The selling price is $73.86

b) The reduced price is:

$73.86 - $25 = $48.86

c) The percent of markdown:

25/73.86*100% = 33.85% (rounded)

d) The absolute loss:

$69.68 - $48.86 = $20.82