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Question

Carolina Crystals, a midrange jewelry store located at Harbor Village in San Diego, serves two clienteles: regular customers who purchase gifts and special-occasion jewelry year-round, and tourists visiting the city. Although tourism is high in San Diego most months of the year, the proprietor of Carolina Crystals, Amanda, knows that her regular customers tend to purchase more jewelry during November and December for Christmas presents; in late January and early February for Valentine’s Day; and in late April and May for summer weddings. Typically, jewelry is marked up 100% based on cost, but Amanda adjusts her pricing throughout the year to reflect seasonal needs. Amanda always carries a selection of diamond engagement and eternity rings, a wide array of gold charms that appeal to tourists, both regular and baroque pearl strands, and other types of jewelry.

 

1. If Amanda purchases diamond rings at $1,200 each, what would be the regular selling price to her customers, assuming a 100% markup on cost?

 

2. If Amanda thinks that an 85% markup on cost is more appropriate for gold charms, what would be the selling price on a gold sailboat charm Amanda purchases for $135

 

3. Amanda also sells gold bracelets on which the charms can be mounted. She runs a special all year that allows a customer to purchase a gold charm bracelet at 50% off if the customer also buys three gold charms at the same time. If a 7″ gold bracelet costs Amanda $125, what would be the price if the customer bought only the bracelet (without the charms) at a regular 100% markup on cost?

Answer 1

1. If Amanda purchases diamond rings at $1,200 each, what would be the regular selling price to her customers, assuming a 100% markup on cost?

Selling price = cost + (cost x markup)

in this case Selling price = $1200 + (1200 x 1) = $2400

2. If Amanda thinks that an 85% markup on cost is more appropriate for gold charms, what would be the selling price on a gold sailboat charm Amanda purchases for $135

Selling price = cost + (cost x markup)

Selling price = $135 + (135 x .85) = $135 + 114.75 = $249.75

 

3. 7″ gold bracelet costs Amanda $125

Selling price = cost + (cost x markup)

Selling price = $125 + (125 x 1) = $250