Reference no: EM133058176

Question - Edward's Electronics is a small electronics store selling a variety of electronics equipment. It has a small but progressive camera department. Since Edward's does not sell very many cameras during the year, it only has a small number in stock. Edward's has just ordered six of the new digital cameras from Nikon. Edward's owner has been told that the cost of each camera will be $170, with terms 2/15, n/30. The manufacturer's suggested retail price (MSRP) of each camera is $400. Edward's owner calculates that the overhead is 15% of the MSRP and that the desired profit is 18% of the MSRP. Sears has a large camera shop in its store in the mall in the same town. It has ordered 70 of the same cameras from Nikon. Sears has been offered both a cash discount and a quantity discount off the list price of $170. The cash discount is 3/20, n/45, while the quantity discount is 3.5%. Sears estimates its overhead is 25% of the MSRP and it would like to make a profit of 35% of the MSRP.

Required -

1. What is the cost per camera (ignoring taxes) for Edward's Electronics and for Sears?

2. For each store, what is the minimum selling price required to cover cost, overhead, and desired profits?

3. If Edward's and Sears sell the camera at the MSRP, how much extra profit will each store make

(a) in dollars?

(b) as a percent of MSRP?

4. What rate of a markdown from MSRP can Edward's offer to cover its overhead and make its originally intended profit?