Reference no: EM131828715

The following examples are several types of discounts. In each situation: ( a ) explain what type of discount is used, ( b ) determine by what percentage the cost of the product has been reduced, as well as savings per unit, and ( c ) answer other questions asked for each situation.

a. Bust well Inc., a regional business computer firm, is attempting to sell a new computer-operated gasoline pump meter to a convenience store chain, Gas 'N' Go. The device will help reduce gasoline theft, give an accurate record of each sale, and aid in determining when Gas 'N' Go should order more gasoline. Gus Gas, of the convenience chain, seems interested in your initial proposal but believes the price may be too high. The cost of each computer is $1,000, but you could sell Gas 50 computers for $45,000. The Gas 'N' Go chain owns 43 stores and is building eight more that will open in about one month.

b. The Storage Bin Warehouse in your territory has reported a number of breakins in the past three months. As a salesperson for No-Doubt Security Products, you believe your extensive line of alarm systems and locks could benefit the warehouse greatly. You make an appointment with the manager at the Storage Bin for early next week. During your preparation for the sales call, you discover that the warehouse currently uses poor-quality locks and has no security system. You plan to offer the manager a security package consisting of 150 Sure-Bolt dead-bolt locks (for their 150 private storage rooms) at a price of $10 each and a new alarm system costing $5,000. The terms of the sale are 2⁄10 net 30. How would the total cost change if the terms of the alarm system alone were changed to 5⁄10 net 30 (and the locks remained 2⁄10 net 30)? What is the cost of the security package if the Storage Bin takes 25 days to pay for the purchase?

c. You are a salesperson for Madcap Arcade Games, selling video games and pinball machines. A local business wants to open an arcade and would like to buy a new game about every two weeks. A new game costs $3,000. You can offer a 5 percent discount (an end-of-year rebate) if at least 25 games are purchased from you during the next year. What will the discount be in dollars?

d. The XYZ company is having its year-end sales push. As a salesperson for XYZ, a manufacturer of consumer goods like toothpaste, shampoo, and razor blades, you have been instructed to give a "buy 11 get 1 free" discount to half of your accounts. The remainder of your accounts, because of their small volume, are offered 10 percent off on all purchases. Compare the two situations. Which is the better deal?