Question & Answer: KidCo has produced a new toy for young children. It costs KidCo $20 to produce and package…..

KidCo has produced a new toy for young children. It costs KidCo $20 to produce and package each toy. KidCe sells the game to various retailers (eg, toy stores and discount stores), and sets the wholesale price to achieve a 60% markup on cost f these retailers, in turn, calculate their price (to consumer) based on a 50% markup on the retail price how much will a consumer pay for the toy? (Hint: make sure that you understand the difference between markup on cost and markup on retail.) 5 points 2)

KidCo has produced a new toy for young children. It costs KidCo $20 to produce and package each toy. KidCo sells the game to various retailers (e.g., toy stores and discount stores), and sets the wholesale price to achieve a 60% markup “on cost”. If these retailers, in turn, calculate their price (to consumer) based on a 50% markup “on the retail price” how much will a consumer pay for the toy?

Expert Answer

Answer

Cost of Production = $20

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Markup = 60%

Wholesale price = Cost of Production*(1+Markup) = 20*1.6=32 $

Markup of retailer = 50%

Customer has to pay = wholesale price*(1+Markup of retailer) = 32*1.5=48 $

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