Cost price analysis

  30. A men’s accessories buyer purchases 10,000 neckties from a manufacturer at the low cost price of $16 per tie. Noticing that the ties are of two types, 6,200 solids and 3,800 stripes, the buyer decides to attempt some creative merchandising. If each solid tie is retailed at $45, what minimum retail price should be placed on each striped tie if the average markup of 68% is desired? Total cost of neckties = 10,000 x $16 = $160,000 Retail price = 10,000 / (100 – 68%) = $160,000 / 0.32 = $500,000 Solid tie = 6,200 x $45 = $279,000 Total retail price of stripes = $500,000 - $279,000 = $221,000 Total of 3,800 stripes Avg retail price of tie = Total retail price of stripes / total stripes Retail price per striped tie = $221,000 / 3,800 = $58.16