SOLUTION: Suppose a bakery makes 200 cherry cheesecakes at a cost of $2.35 each. If a spoilage rate of 5% is anticipated, at what price (in $) should the cakes be sold to achieve a 40% marku

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Question 1172535: Suppose a bakery makes 200 cherry cheesecakes at a cost of $2.35 each. If a spoilage rate of 5% is anticipated, at what price (in $) should the cakes be sold to achieve a 40% markup based on cost? (Round your answer to the nearest cent.)
Answer by Edwin McCravy(20060) About Me  (Show Source):
You can put this solution on YOUR website!
5% of the 200 cakes they make will spoil.  That's (0.05)(200) = 10 cakes that
will spoil.

So they will only be able to sell 200-10 or 190 cakes.

It's going to cost them (200)($2.35) = $470 to make the 200 cakes.

The 40% profit they want to make will be (0.40)($470) = $188.

So they want to be able to take in $470 + $188 = $658.

So they want to sell 190 cakes and take in $658.

So they will have to sell each cake at $658รท190 = $3.463157895 each,
 
Even though the rule says we should round down to $3.46 each, that
would give a small amount less than the 40% markup, so they'll have to
charge $3.47 each, which will give them a little more than 40% markup.
                       
Edwin