Tennis Racquet Markup Calculation: A Case Study

This example explores the concept of markup in a business context using the sale of tennis racquets. Let's break down the scenario and calculate the markup.

Scenario: A batch of tennis racquets was purchased with a discount of 40% off the original price (for buying in bulk) and a further 25% discount (for purchasing in October). The final selling price for each racquet was $54.45.

(a) Calculate the markup as a percent of cost.

(b) Calculate the markup as a percent of selling price.

Solution:

Let 'P' represent the original price of a tennis racquet.

Price after the 40% bulk discount: P - 0.4P = 0.6P* Price after the 25% October discount: 0.6P - 0.25(0.6P) = 0.45P

Since the final selling price is $54.45:0.45P = $54.45

Therefore, the original price (P) is:P = $54.45 / 0.45 ≈ $121

(a) Markup as a percent of cost:

Markup = Selling Price - Cost = $54.45 - $121 = -$66.55

The negative markup indicates a loss, not a profit. Therefore, calculating the markup as a percentage of cost isn't applicable in this scenario.

(b) Markup as a percent of selling price:

Markup as a percent of selling price = (Markup / Selling Price) * 100 = (-$66.55 / $54.45) * 100 ≈ -122.12%

Again, the negative sign signifies a loss.

Conclusion:

This case study reveals that despite the discounts, selling the tennis racquets at $54.45 resulted in a loss. Understanding markup calculations is crucial for businesses to ensure profitability.

Tennis Racquet Markup Calculation: A Case Study