Use the trade discount system shown in the table to calculate the cost of 110 lbs of product if the retail price is $4 per pound.
| | |
| :-------- | :------- |
| Trade Discount | |
| 0-100 lbs | 0% |
| 101-400 lbs | 10% |
| 401+ lbs | 25% |
$
Answer (1)
Calculate the total retail price: 110 × $4 = $440 .
Determine the applicable discount: 10% for 110 lbs.
Calculate the discount amount: $440 × 0.10 = $44 .
Calculate the final cost: $440 − $44 = $396 .
Explanation
Calculate Total Retail Price First, we need to determine the total retail price of the product without any discounts. We know that the retail price is $4 per pound and we are purchasing 110 lbs of the product. Therefore, the total retail price is calculated as: T o t a lR e t ai lP r i ce = Q u an t i t y × R e t ai lP r i ce p er p o u n d
Substituting Values Now, we substitute the given values into the formula: T o t a lR e t ai lP r i ce = 110 × $4 = $440
Determine Applicable Discount Next, we need to determine the applicable discount. According to the table, for quantities between 101 and 400 lbs, the trade discount is 10%. Since we are purchasing 110 lbs, the 10% discount applies.
Calculate Discount Amount Now, we calculate the discount amount. The discount amount is calculated as: D i sco u n t A m o u n t = T o t a lR e t ai lP r i ce × D i sco u n tP erce n t a g e
Substituting Values Substituting the values, we get: D i sco u n t A m o u n t = $440 × 0.10 = $44
Calculate Final Cost Finally, we calculate the final cost by subtracting the discount amount from the total retail price: F ina lC os t = T o t a lR e t ai lP r i ce − D i sco u n t A m o u n t
Final Answer Substituting the values, we get: F ina lC os t = $440 − $44 = $396 Therefore, the cost of 110 lbs of the product after applying the trade discount is $396 .
Examples
Imagine you are buying materials for a construction project. You need 110 lbs of nails, which cost $4 per pound at retail. The hardware store offers a 10% discount for purchases between 101 and 400 lbs. By calculating the total retail price ( $440 ) and applying the 10% discount ( $44 ), you determine the final cost to be $396 . This calculation helps you budget effectively for your project and understand the savings from volume discounts. Understanding trade discounts is crucial in business for managing costs and pricing strategies.
