Sometimes manufacturers give more than one discount instead of a single trade discountfor example, in trading with
Question:
Sometimes manufacturers give more than one discount instead of a single trade discount—for example, in trading with large-volume retailers. Such a series discount is quoted as a sequence of discounts, taken one after another. Suppose a manufacturer normally gives a trade discount of 45%, but it has too much of the item in inventory and so wants to sell more. In this case, the manufacturer may give all retailers another discount of 15% and may perhaps extend yet another discount of 10% to a specific retailer it wants to land as a client. In this example, the series discount would be 45%, 15%, 10%, calculated one after another, like this: For an item with a suggested retail price of $100.00, applying the first discount gives
100.00 − 45% × 100.00 = 55.00 dollars.
The second discount of 15% is applied to the $55.00 as follows:
55.00 − 15% × 55.00 = 46.75 dollars.
Now the third discount gives the final cost price of
46.75 − 10% × 46.75 = 42.08 dollars.
(b) Suppose an item has a suggested retail price of $100.00 and the manufacturer is giving a series discount of 25%, 10%, 5%. What is the resulting cost price? (Round your answer to two decimal places.) $
(d) Explain why we could have calculated the same answer as in part (b) by multiplying 100.00 × 0.75 × 0.9 × 0.95. In this case, what do the 0.75, 0.9, and 0.95 represent?
Business Math
ISBN: 978-0133011203
10th edition
Authors: Cheryl Cleaves, Margie Hobbs, Jeffrey Noble