Tutorial exercises

1. Fossil watch shop sells watches to jewelry stores for RM18.45 each. The jewelry store
calculates the suggested retail price and attaches it to each watch. The retail price is
computed by marking up the cost to the jewelry store by 160 percent of the cost. What is the
suggested retail selling price?

S = C+M
= 18.45+(1.6X18.45)
= 18.45+29.45
= RM 47.97

2. A DVD movie was marked up RM125.00, which was a 40% markup based on cost. What was
the cost of the DVD?

S = C+M
= 125.00+(0.4X125.00)
= 125.00+50
= RM 175

3. Suppose a shopkeeper has bought 3 kg of mangos for RM21.00. And sold it for RM10 per
kg. How much is the profit gained by him?

Cost price = 21.00

Selling price = 10.00

Selling price = 10.00x3

= 30

P = SP-CP
= 30.00-21.00
= 9.00

4. A man buys a fan for RM93.00 and sells it at a loss of 15%. What is the selling price of the fan?

Sr = S(1-%MD)

Cost price = 93.00

Loss = 15%

15% of CP = 13.95

Selling price = cost price-loss

= 93.00-13.95
= RM 79.05
5. You are the purchasing officer of a kid’s apparel store that in Shah Alam. The store business
operates 25 stores strategically located in the region. Due to the decline in demand caused
by the pandemic covid-19, the company is proposing measures to cut cost. The manager
asked you to look for cheaper source of the items. The company always avail of trade and
cash discount. You decided to call the suppliers and gathered the following data;

Supplier A – The supplier offers 15% trade discount.

Supplier B– The supplier offers chain discounts of 10/5/2.
Supplier C – The supplier offers no trade discount but cash discount of 5/10, n/30.
Supplier D – The supplier offers trade discount of 10%, the terms of payment are 2/10, n/30.

A. If the company decides to buy RM1,500 worth of items from Supplier A, what is the
amount of trade discount? What is the net price?

LP = 1500 NP = L- A
r = 15% = 1500 - 225
A=? = RM 1275

A = LP x r
= 1500 x 15%
= RM 225

B. If the company decides to buy RM1,500 worth of items from Supplier B, what is the
single discount equivalent? What is the net price?

r = 1 – ((1-0.1)(1-0.8)(1-0.02))
= 1 – ((0.9)(0.95)(0.98)
= 0.16

NP = 1500 x 0.8379
= RM 1256.85

C. if the company decide to buy RM 1,500 worth of items from Supplier C, what is the
amount of discount and the price paid if made within the discount period?

Cash Discount = 0.05

LP x cash discount = 1500 x 0.05

= 75

1500 -75 = RM 1425

D. If the company decides to buy RM1,500 worth of items from Supplier D, what is the
amount of trade discount, cash discount and the price paid if made within the discount
period?

LP = 1500
1 = 0.1
Cd = 0.02
 LP x Cash discount = 1500 x 0.02 = 30
Trade discount
A = L x Trade discount
= 1500 x 0.1
= 150

1500-30
= RM 1470

E. Which supplier would you recommend? Discuss your reason.

Supplier B, because the net price of supplier B lower than other supplier which is
RM1256.85