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What price reduction must be negotiated with the supplier

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Problem - Home and Gather are in the business of selling homewares and small furniture items to local customers on the Gold Coast. They are looking at introducing vintage coffee tables to their existing product range. Market research indicates that these tables could be sold for $250 each. The company budgets for a 30 per cent profit margin. The budgeted cost of the tables are expected to be 70 per cent of the target cost. A supplier has offered to provide the tables for $150 each.

Required - What price reduction must be negotiated with the supplier to meet the expected cost?

a. $75.00

b. $27.50

c. $25.00

d. No cost reduction is required to meet the expected cost.

Reference no: EM132695626

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