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) $$ (3 imes 2) $$

Question

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) $$ (3 	imes 2) $$

UpStudy AI · Accepted Answer

1.2.1 Calculation  
Let the cost of a good be $$ C $$. With a desired markup of $$ 100\% $$ on cost, the intended selling price would be:  
$$
\text{Desired Selling Price} = C + 100\% \times C = C + C = 2C.
$$  
Suppose in 2016 the goods were sold for a price lower than $$ 2C $$. For example, if the business sold the goods at $$ 1.8C $$ instead of $$ 2C $$, then the actual markup on cost would be calculated as follows:  
$$
\text{Actual Markup} = \frac{\text{Selling Price} - C}{C} \times 100\% = \frac{1.8C - C}{C} \times 100\% = \frac{0.8C}{C} \times 100\% = 80\%.
$$  
This calculation supports the statement that the business was unable to achieve a $$ 100\% $$ markup, as the achieved markup was only $$ 80\% $$ instead.

1.2.2 Reasons for Not Achieving the Desired Markup  
1. **Competitive Pricing:** Intense competition in the market may force the business to lower its selling price below the planned level, reducing the markup.  
2. **Market Demand and Price Sensitivity:** If customers are unwilling to pay a higher price, the business may have to adjust prices downward to maintain sales volumes, resulting in a lower markup.  
3. **Increased Operating Costs:** Rising operational expenses or unforeseen costs may force the business to reduce the markup to remain competitive and maintain sales.  
$$(3 \times 2)$$
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.

Upstudy AI Solution

Answer

Solution

The Deep Dive

Related Questions

Latest Economics Questions