# The Nguyen Company sells beautiful oriental water fountains through wholesalers and retailers....

## Question:

The Nguyen Company sells beautiful oriental water fountains through wholesalers and retailers. They suspect that the retailer is taking an extra 15% more in markup than they should, but Nguyen Management cannot prove it. The retail selling price is $1,199.99, and the manufacturing cost to the company is$425.00. The retail markup was 38%, and wholesale markup was 25%. Show all work.

A. What was the cost to the wholesaler?

B. What was the cost to the retailer?

C. What percentage markup did the producer make?

## Calculating Retail Markup

Markup is the percentage difference between the wholesale cost and the retail cost. In some cases, there are two markups: one from manufacturer to wholesaler, and another from wholesaler to retailer.

## Answer and Explanation:

Mark up % = mark up amount/selling price. mark up amount = selling price - cost.

Now, manufacturing cost to the company = $425. let the selling price to the wholesaler be "x". Thus mark up for the manufacturer = x-425. and markup % = (x-425)/x Now, cost to the wholesaler = selling price of the manufacturer = x. Wholesale mark-up = 25%. Let the wholesaler's selling price be "y". Thus mark up = y-x and mark up % = (y-x)/y. Therefore, (y-x)/y = 25% or 3y = 4x or y = 4/3x cost to the retailer = y. retail selling price =$1,199.99. mark up = $1,199.99-y. Mark up % = ($1,199.99-y)/$1,199.99 = 38% or,$1,199.99 - y = 0.38*$1,199.99 or$1,199.99 -y = 456 or y = 743.99

A. cost to the wholesaler = x. and 3y = 4x or x = 3/4y = 3/4*743.99 = $558 B. cost to the retailer = y =$743.99

C. % markup for the producer = (selling price for the producer - cost to the producer)/selling price for the producer

selling price for the producer = cost of the wholesaler = \$558

% markup = (558-425)/558 = 23.83%