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1.2.The business marks their goods at cost plus \( 100 \% \) "The business was unable to achleve the desired mark up of \( 100 \% \) on cost in 2016" 1.2.1 Provido a calculation to support the statemont above (5) 1.2.2 Montion any 3 reasons why a business does not achlove the dosired mark -up \% (6) \( (3 \times 2) \)

Ask by Garza Chambers. in South Africa
Mar 12,2025

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1.2.1 Calculation If the cost is \( C \), a \( 100\% \) markup would mean selling at \( 2C \). If the business sold at \( 1.8C \), the markup is \( 80\% \), showing they didn't reach the desired \( 100\% \). 1.2.2 Reasons for Not Achieving the Desired Markup 1. **Competitive Pricing:** High competition may require lower prices. 2. **Market Demand:** Customers may not pay higher prices. 3. **Increased Costs:** Higher expenses may force price reductions.

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To support the statement that the business was unable to achieve the desired markup of 100% on cost in 2016, let's assume the cost of a good is \( C \). The markup at 100% means the selling price should be \( S = C + 100\% \text{ of } C = 2C \). If the actual selling price realized by the business is less than \( 2C \), it demonstrates the inability to achieve the desired markup. For example, if the cost is \( R100 \) and they sold for \( R180 \), their markup is \( \frac{180 - 100}{100} \times 100 = 80\% \), which shows they fell short. Several reasons might contribute to a business not achieving the desired markup percentage. Firstly, competition can lead to price cutting; if competitors offer similar products at lower prices, the business may need to reduce their prices to attract customers. Secondly, decreased demand in the market can force businesses to lower prices to boost sales. Finally, increased operational costs, such as rising rent or supply costs, might lead businesses to set prices that do not reflect the desired markup while still attempting to cover expenses.

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