Question

Many luxury sheets cost less than $200 to make but sell for more than $500 in retail stores. Some cost even more dash–consumers pay almost $3,000 for Frett'e "Tangeri Pizzo" king-size luxury linens. The creators of a new brand of luxury linens, called Boll & Branch, have entered this market. They want to price their sheets lower than most brands but still want to earn an adequate margin on sales. The sheets come in a luxurious box that can be reused to store lingerie, jewelry, or other keepsakes. The Boll & Branch brand touts fair trade practices when sourcing its high-grade long-staple organic cotton from India. The company calculated the price to consumers to be $350If the company decides to sell through retailers instead of directly to consumers online, to maintain the consumer price at $350,at what price must it sell the product to a wholesaler who then sells it to retailers? Assume wholesalers desire a 5percent margin and retailers get a 30percent margin, both based on their respective selling prices.

Answer 1

Answer:

at what price must it sell the product to a wholesaler who then sells it to retailers?

• $232.75

Explanation:

sales price to consumers = $350

retailers' margin = $350 x 30% = $105

price at which retailers purchase each unit = $350 - $105 = $245

sales price to retailers = $245

wholesaler's margin = $245 x 5% = $12.25

price at which wholesaler purchases each unit = $245 - $12.25 = $232.75

how to verify this:

($232.75 x 5/95) + $232.75 = $245

($245 x 30/70) + $245 = $350