Question

Aunt Sally’s “New Orleans Most Famous Pralines” sells pralines costing $1.05 each to make. If Aunt Sally’s wants a 40% markup based on selling price and produces 35 pralines with an anticipated 19% spoilage, what should each praline be sold for? (Round your answer to the nearest cent.)
Selling price $

Answer 1

COST + MARK UP = SELLING PRICE
COST = $1.05 * 35PCS = $36.75
MARK UP = 40% OF SELLING PRICE

S = $36.75 + 0.40S
S - 0.40S = $36.75
0.60S = $36.75
S = $36.75 / 0.60
S = $61.25 - TOTAL SALES

19% SPOILAGE OF THE 35 PRALINES = 6.65 PRALINES

$61.25 / 35-6.65 = $61.25 / 28.35 = $ 2.16 OR $2.20 ROUNDED OFF SELLING PRICE FOR EACH PRALINE

To check:

Total Sales     61.25
Total Cost       36.75
Margin            24.50

24.50 / 61.25 = 40% of the sales.

Answer 2

The selling price of each "New Orleans Most Famous Praline" should be $1.77.

What is the selling price?

The selling price of a unit of goods is the amount that buyers are willing to exchange the goods with their money.

The selling price may be determined by adding the target profit to the cost price (mark-up) or adding a percentage of the selling price as the profit (margin).

Data and Calculations:

Cost price per unit = $1.05

Margin (Markup on selling price) = 40%

Margin = 100 + Markup

40% = (100% + 40%)/40%

Markup = 35%

Spoilage rate = 19%

Total cost price for 35 pralines = $36.75 ($1.05 x 35)

Selling price for 35 pralines = $49.60 ($36.75 x 1.35)

Good units to be sold = 28 (35 - 1 - 19%)

Selling price for good units = $1.77 ($49.60/28)

Thus, the selling price of each "New Orleans Most Famous Praline" should be $1.77.

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