You buy 3000 sunglasses at a cost of $1.25 each. You know that 20% of the sunglasses will end up on your "bargain table" priced at $1. Additionally, you know that 30% of items on the "bargain table" are defective and must be destroyed. You would like to set your...

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You buy 3000 sunglasses at a cost of $1.25 each. You know that 20% of the sunglasses will end up on your "bargain table" priced at $1. Additionally, you know that 30% of items on the "bargain table" are defective and must be destroyed. You would like to set your selling price to achieve an average markup of 36% (based on the sale price.)

(a) The total cost for the sunglasses is 3000($1.25)=$3750

(b) There will be 600 (3000 times 20%) sunglasses on the bargain table. Of those 600, 180 will be destroyed. So you will sell 2400 sunglasses at full price and 420 sunglasses at $1.

Markup can be calculated by `"Markup"=("sales"-"cost")/"cost"` ; `("sales"-3750)/3750=.36`

This is implies that the total sales should be $5100.

However the tagline indicates that we are looking for effective markup -- depending on the usage this is probably the profit margin (as opposed to the profit percentage.) To calculate the profit margin we have `"ProfitMargin"=("Totalsales"-"cost")/("Totalsales")`

`"PM"=("sales"-3750)/("sales")`

`.36=("sales"-3750)/"sales"`

`3750=.64"sales"`

`"sales"=5859.38`

Assuming that the question is asking for profit margin (also called the markon percent) then we need total sales of $5859.38

(c) To determine the retail sales price: the total sales should be 5859.38, there are 2400 sold at full price and an additional 420 sold for $1.

2400x+420=5859.39 ==> the retail sales price should be $2.27

(Using the $5100 from above gives a retail price of $1.95).

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