Use the trade discount system shown in the table to calculate the cost of 300 lbs of product if the retail price is $6 per pound.
| | |
| :--------- | :------------- |
| Trade Discount | |
| 0-100 lbs | 5% |
| 101-400 lbs| 15% |
| 401+ lbs | 30% |
Answer (2)
Determine the applicable trade discount: 15% for 300 lbs.
Calculate the total retail price: 300 × $6 = $1800 .
Calculate the discount amount: $1800 × 0.15 = $270 .
Subtract the discount to find the final cost: $1800 − $270 = $1530 .
Explanation
Identify the Discount First, we need to identify the correct discount based on the quantity of product purchased. In this case, we are buying 300 lbs of product. According to the table, the trade discount for quantities between 101 and 400 lbs is 15%.
Calculate Total Retail Price Next, we calculate the total retail price of the product before any discount is applied. The retail price is $6 per pound, and we are buying 300 lbs, so the total retail price is: 300 × 6 = 1800
Calculate Discount Amount Now, we calculate the discount amount. The discount is 15% of the total retail price, so the discount amount is: 1800 × 0.15 = 270
Calculate Final Cost Finally, we subtract the discount amount from the total retail price to find the final cost: 1800 − 270 = 1530
State the Final Answer Therefore, the cost of 300 lbs of product after applying the trade discount is $1530 .
Examples
Trade discounts are commonly used in business to encourage larger purchases. For example, a local bookstore might offer a 15% discount to schools that purchase more than 100 books at a time. This helps the bookstore move more inventory and allows the schools to save money on their required reading materials. Understanding how to calculate these discounts is essential for both businesses and consumers to make informed purchasing decisions.
The cost of 300 lbs of product at a retail price of $6 per pound, after applying a 15% trade discount, is $1530. This is calculated by first determining the total retail price, then calculating the discount amount, and finally subtracting that from the retail price. The steps involve basic multiplication and percentage calculations.
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