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Difficulty: MediumPercentage Change, Markups, and Discounts

A commercial landscaping company is purchasing a new riding lawnmower. The dealership acquired the lawnmower at a wholesale cost of $1,200.00\$1,200.00. To determine the retail price, the dealership applies a 30%30\% markup to the wholesale cost. During a spring promotional event, the dealership offers a 20%20\% discount off the retail price. What is the final sale price of the lawnmower?

  1. A
    $312.00\$312.00
  2. $1,248.00\$1,248.00Answer
  3. C
    $1,320.00\$1,320.00
  4. D
    $1,540.00\$1,540.00

Answer

The final sale price of the lawnmower is $1,248.00\$1,248.00.
The retail price is calculated by adding the 30%30\% markup to the wholesale cost ($1,200.00+$360.00=$1,560.00\$1,200.00 + \$360.00 = \$1,560.00). The final sale price is then found by subtracting the 20%20\% discount from this established retail price ($1,560.00−$312.00=$1,248.00\$1,560.00 - \$312.00 = \$1,248.00).

Step-by-Step Solution

1
Calculate the markup amount based on the wholesale cost.
$1,200.00×0.30=$360.00\$1,200.00 \times 0.30 = \$360.00
The dealership applies a 30%30\% markup to the original wholesale cost to determine the retail price.
2
Calculate the retail price.
$1,200.00+$360.00=$1,560.00\$1,200.00 + \$360.00 = \$1,560.00
The retail price is the sum of the wholesale cost and the markup.
3
Calculate the discount amount based on the new retail price.
$1,560.00×0.20=$312.00\$1,560.00 \times 0.20 = \$312.00
The promotional 20%20\% discount must be calculated using the retail price, not the wholesale cost.
4
Calculate the final sale price.
$1,560.00−$312.00=$1,248.00\$1,560.00 - \$312.00 = \$1,248.00
The final sale price is determined by subtracting the discount amount from the retail price.

Key Concept

When applying consecutive percentage changes, such as a markup followed by a discount, each percentage must be applied to the newly updated base amount, not the original starting amount.
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Topics

Percentage Change, Markups, and Discounts

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