Chapter 1 and 2 Review

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^[1] Gems Inc., an upscale jewelry store, purchased a diamond ring for $2,500 less 40% and 5%. The store’s average per unit operating expenses (overhead) is 30% of cost. The “regular selling price” of the ring is established so that if the ring is sold in a “20% off sale” the net profit at the reduced price will be 20% of cost.

1. What is the reduced price of a ring in a “20% off’ sale?
2. What is the “regular price” of the ring?
3. What is the net profit if the ring is sold at the “regular price”?

^[2] Samsong Inc., a TV manufacturer lists its deluxe models for $450 each, less trade discounts of 15% and 8%. A retailer wants to make a net profit of 10% of the selling price. If expenses are 15% of the selling price, at what price must he sell the TV?

^[3] The Alfacenturi Corp received an invoice dated July 12th for $5,400 with terms 3/10, 1.5/20, n/45. ABC made a payment of $2,000 on July 20th, and a second payment on July 31st that reduced the balance owing to $1,000. Find the size of the second payment.

^[4] An item that normally sells for $550 is put on sale for $357.50. Find the rate of markdown.

^[5] Radio Shock Electronics Co. makes televisions. Radio Shock sold a number of TV sets to a wholesaler at $399.90 per set, after discount rates of 15%, 9% and 6%.

1. What is the list price of a TV set?
2. What is the size of the 3rd discount (in dollars)?

^[6] A retailer has a policy of maintaining a margin of 60% on all items.

1. What is their rate of markup?
2. Another company maintains a 60% rate of markup on all items. What is their percent margin?

^[7] A company purchases a line of basketball sneakers for $60 from Niko Inc. and sells them for $120.

1. What is the markup in dollars?
2. What is the percent margin?
3. What is the rate of markup?

^[8] A pair of radically shaped skis costs the retailer $600 less chain discounts of 50%, 30% and 10%. The retailer maintained a 65% margin on all items. Since spring was fast approaching the retailer drastically reduced the selling price of the skis by 60%.

1. What was the regular selling price?
2. What is the sale price?
3. What is the rate of markup? (use the sale price not the regular price)

^[9] What is the cost of an item that sells for $80 if the rate of markup is 60%?

^[10] You know that a retailer makes $450 on the sale of a snowboard and the retailer has a rate of markup of 60%.

1. What is the selling price of a snowboard?
2. What is the percent margin?

^[11] Filters-R-Us makes plastic coffee filters . It costs the company $6,500 to make 2,000 filters and $8,000 to make 4,000 filters. Assume the relationship between cost and the number of coffee filters produced is linear.

1. Find an equation that determines the cost, based on the number of filters produced.
2. How much would it cost to produce 3,000 coffee filters?

^[12] Dick, Ed and Fran formed a partnership. The partnership agreement requires them to provide capital when and as required by the partnership in the ratio of 7:9:8, respectively.

1. If the total required initial investment was $96,000, how much did each contribute?
2. One year later, Dick’s share of another injection of capital was $10,500.
   1. What is the total investment made by the partnership including the initial investment?
   2. What is Ed’s share of the entire investment?

^[13] At the Mac’s store in Burnaby a 500 ml bottle of sparkling water sells for 1.19CAD. Convert this price to US dollars per gallon.

Rates:

• 1 CAD= 0.7125 USD
• 1.0567 Quarts= 1 Litre
• 1 Gallon = 4 Quarts
• 1,000 ml= 1 Litre

^[14]  A diamond ring cost a jeweler $4,200. He requires a margin of 45%.

1. At what price should he sell the ring?
2. What rate of markup did he realize?

^[15]     You are planning to open a neighbourhood ice cream shop and are doing some financial analysis. You can lease the shop for $4,300 for one month, salaries will cost $12,100 per month, hydro and miscellaneous expenses will be $450 per month. You can sell ice cream cones for $4.75 each. Each ice cream cone costs you $2.05.

1. Write down the revenue and cost equations.
2. Determine the number of ice cream cones you must sell in a month to break even. What are your total sales (in dollars) at the breakeven point?
3. You’d like to make a profit of $4,000 in one month. Determine the number of ice cream cones that you would need to sell.
4. Find the profit/loss if monthly sales (in dollars) are $14,250.

^[16] Liquidation Electronics sells an article for $1,020.00 less 25% and 15%. A competitor carries the same article for $927.00 less 25%. What further discount must the competitor allow so that its net price is the same as the discount store’s?

^[17] Find the equation of the line that passes through the points (-2, 5) and (3, 2).

^[18] The license to operate a taxicab costs $2,000 per month. Insurance is $250 per month and maintenance averages $225 per month. Fuel costs $0.20 per kilometre. Taximeter rates are regulated and set at $0.45 per kilometre.

1. Determine the breakeven point for operating a taxicab.
2. What are the units for x, and what are the units for the slope?
3. What will be the profit/loss if 4,900 km are driven?
4. How many kilometres must be driven to make a profit of $2,500?

^[19] Forever-Green Press prints its elegant advertising calendars in November and sells them for $9.60 each. The Company’s production capacity for this run is 60,000 calendars at a variable cost of $3.80 each. The fixed costs (including artwork and licensing fees) allocated to this production run are $232,000. Assume that the company can sell all the calendars it produces.

1. What is the breakeven point in (a) units; (b) sales; dollars; (c) percent of capacity?
2. How many calendars must be printed and sold if they want to make a profit of $87,000?
3. If the plant operates at full capacity and November’s entire calendar production run is sold, what profit (or loss) will be made?
4. Graph the cost and revenue equations (same graph). Mark the Breakeven Point on the graph.
5. If the variable cost increases by 25%, the fixed costs increase to $240,000, what new selling price should they charge if they want to earn a profit of $50,000, from the sale of 40,000 calendars?

^[20] Plutonium fuel rods are sold at a list price of $5,000 with chained discounts of 15% and 25%.

1. Calculate the net price of a fuel rod.
2. Calculate the single equivalent discount rate.
3. The company selling the fuel rods would like to add a third discount to bring the overall discount rate to 40%. How large should the third discount be?
4. A competing firm offers a single discount of 35%. This amounts to a discount of $1,680 off the list price. What is the list price?

^[21] Two long distance phone companies offer the following quotes:

• PLAN A: $22 per month plus $0.04 per minute.
• PLAN B: $15 per month plus $0.08 per minute.

Determine the point of indifference (i.e., the number of minutes per month where the costs are equal).

^[22] Compute the single discount equivalent to the discount series 40%, 10%, 5%.

^[23] An invoice for $3,200.00, dated April 20, has terms 2/10, n/30. What payment must be made on April 30th to reduce the debt to $1,200.00?

^[24] On May 30th, Restorative Services Ltd. received an invoice for $2,600, terms 1.5/10, n/30. On June 9, Restorative Services made a partial payment of $1,379.00 on the invoice. How much is still owing after the payment?

^[25] Albert, Bob and Chuck form a partnership and agree that half of the annual profit be distributed in proportion to the total number of hours worked in the business during the year and the other half in the ratio 4:3:2, respectively. The hours of work for Albert, Bob and Chuck were 300, 200 and 100, respectively. How much of the $180,000 profit should Chuck receive?

^[26] The regular selling price of merchandise sold in a store includes a margin of 60%. During a sale, an item that cost the store $250 was marked down 40%. For how much was the item sold?

^[27] An item that cost the dealer $500 less 20%, 15%, carries a price tag at a markup of 150% of cost. For quick sale, the item was reduced 30%. What was the sale price?

^[28] An appliance shop reduces the price of an appliance for quick sale from $1,560.00 to $1,195.00. Compute the rate of markdown.

^[29] Log-it-All Forest Products sells Grade-A sheets of plywood at trade discounts of 25%, 3%. A competitor has been selling the plywood at the same list prices but with trade discounts of 20%, 12.5%. Log-it-All wants to beat the competitor’s prices by offering a third trade discount. At least how big must the additional discount rate be to meet this objective?

^[30] What amount must be remitted if the following invoices, all with terms 4/10, 2/30, n/60, is paid on May 10?

• $850.00 less 20%, 10% dated March 21
• $960.00 less 30%, 16.67% dated April 10
• $1040.00 less 33.33%, 25%, 5% dated April 30