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A distribution channel for the sale of imported Italian leather shoes includes a manufacturer, a distributor and retailer. The retailer sells the shoes to his consumers for $126 a pair, earning a margin of 22%. The distributor buys the product directly from the manufacturer for $61. The manufacturer realizes a 63% margin when selling to the distributor.
1. What is the dollar margin ($) earned by the retailer for each pair of shoes sold?
2. What price does the distributor sell to the retailer?
3. What is the distributor's dollar margin?
4. If the retailer must maintain a margin of at least 12% on every pair of shoes sold and believes the retail customer won't pay more than the current retail price, what is the most the retailer would be willing to pay the distributor for shoes?
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