Question 700032: On July 8, 2009, Leon's Kitchen Hut bought a set of pots with a $120.00 list price from Lambert Manufacturing. Leon's receives a 25% trade discount. Terms of the sale were 2/10, n/30. On July 14, Leon's sent a check to Lambert for the pots. Leon's expenses are 20% of the selling price. Leon's must also make a profit of 15% of the selling price. A competitor marked down the same set of pots 30%. Assume Leon's reduces its selling price by 30%.
What is the sale price at Kitchen Hut?
What was the operating profit or loss?
I know the answer just do not know how they got them?
Answer by KMST(5328)   (Show Source):
You can put this solution on YOUR website! If Lambert Manufacturing lists the set at $120.00, but will give Leon's a 25% discount,
the price for Leon's will be 75% (= 100%-25%) of $120.00,
which calculates as $93.75 
Since Leon's paid within 10 days to get the 2% discount,
Leon's had to pay 98% (= 100%-2%) of $93.75,
which calculates as $ .
If  = Leon's selling price, which must cover the $91.88 paid to Lambert,
plus  for expenses (20% of selling price),plus  in profits (15% of selling price),
 -->  -->  -->  -->  -->  (rounded)
Maybe that ($141.35) is what is called "the sale price at Kitchen Hut."
If a competitor sells the same set for 30% less,
they would be selling it for 70% (= 100%-30%) of $141.35.
That would be $ , which rounds to $98.95.
If Leon's matches that price, it will barely cover the $91.88 paid to Lambert.
The difference, $98.95-$91.88=$7.07 would not cover Leon's expenses,
even if we calculate them as 20% of the reduced $98.95 sale price,
20% of $98.95 is $ = $
Is the $7.07 considered "operating profit, without taking expenses into account?
Do we subtract expenses calculated as 20% of the reduced price, and it is considered a loss? In that case, the $19.79 expenses minus the $7.07 would be a loss of
$19.79-$7.07=12.92.
Or would you calculate Leon's expenses based on the originally calculated sale price of $141.35, as
$ =$ ?
In that case, would the loss be calculated as $27.72-$7.07=$21.20 ?
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