Pricing Excercise Solutions.doc - SOLUTIONS TO MATH EXERCISES 1 a A pet store buys donkeys from a donkey wholesaler who buys them from a donkey ranch

Pricing Excercise Solutions.doc - SOLUTIONS TO MATH...

• vchust2
• 7

This preview shows page 1 - 3 out of 7 pages.

SOLUTIONS TO MATH EXERCISES 1)a.) A pet store buys donkeys from a donkey wholesaler, who buys them from a donkey ranch. The pet store demands a 30% margin on each donkey it sells, and the wholesaler demands a 25% margin. The rancher’s margin is 40%. If the pet store retails the donkeys for \$219.49, what is the rancher’s variable cost? Plug into EquationCalculate the Rancher (Manufacturer) margin (MM) in dollars and the Rancher (Manufacturer) Variable Cost (MVC), which is the final answer.
b.) Now let’s see what happens if the percentages are all Markups instead of Make sure to Choose the Correct FormulaMarkup % = (Price – Cost) / CostCost = Price / (1 + Markup)Examine what information you are given: Plug into EquationCalculate the retailer markup (RM) in dollars and the Retailer Cost, which is also the wholesaler selling price (WSP). Repeat the process at each required step until you arrive at the final variable cost for the rancher: Plug into EquationCalculate the Wholesaler markup (WM) in dollars and the Wholesaler Cost, which is also the Rancher (Manufacturer) selling price (MSP).