# Ski Market sells snowboards. Ski Market knows that the maximum people will pay for the snowboards...

Ski Market sells snowboards. Ski Market knows that the maximum people will pay for the snowboards is $129.99. Ski Market is convinced that it needs a 45% markup based on cost. What is the maximum that Ski Market can pay to its supplier for the snowboards? ## Markup and Selling Price: The selling price of a unit of any product is usually determined by adding the markup value to the cost price where the markup is governed by a predetermined desired profit percentage. The total cost incurred usually consists of direct costs such as material and labor costs and the allocated indirect costs. ## Answer and Explanation: The calculated value of the maximum amount that Ski Market can pay to the supplier for the snowboards is$89.65.

The maximum purchase price which can be paid to the supplier is given by:

• = Maximum price that people would pay for the snowboards / (1 + markup percentage)
• {eq}= \dfrac{\$129.99}{(1 + 45\%)} {/eq} • {eq}= \dfrac{\$129.99}{1.45} {/eq}
• = \$89.65