Problem 1: A jewellery store purchased a diamond rig for $2500 less 40% and 5%. The store's average unit overhead expenses are 30% of cost. The "regular price" of the ring is established so that, if it is sold in a "20% off" sale, the unit operating profit at the reduced price will be 20% of cost.
a. What is the reduced price of the ring in a "20% off" sale?
b. What is the regular price of the ring?
c. What is the operating profit if the ring happens to sell at the "regular price?"
Problem 2: Furniture Warehouse bought upright freezers for $1800 less 33 1/3% and 5%. The store's overhead works out to 30% of cost. The freezers are initially priced so that a profit of 16 2/3% of cost will be realized when a freezer is sold at a "15% off" price.
a. What is the initial full rate of markup on cost?
b. During its Scratch-and-Save Sale, customers qualify for an extra discount of either 5%, 7%, or 10%. This extra discount appears when the customer scratches a ticket at the time of a purchase. It is added to the basic 15% discount, making the combined discount 20%, 22%, or 25%, respectively. What is the store's profit or loss per freezer at each of these discounts?