A $100 coat is sold in bulk to your store for $84. Calculate the trade discount rate.
Answer (2)
The trade discount rate for the coat is 16%, calculated by finding the difference between the original price and the bulk price, followed by determining the discount as a percentage of the original price. This signifies a $16 discount on the coat. Therefore, the coat sold at $84 represents a 16% savings from the original price of $100.
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16
Explanation
Understanding the Problem We are given that a coat with an original price of $100 is sold to a store for $84. We need to find the trade discount rate.
Calculating the Discount Amount First, we need to calculate the trade discount amount, which is the difference between the original price and the bulk price.
Determining the Discount The trade discount is calculated as: Trade Discount = Original Price − Bulk Price = $100 − $84 = $16 So, the trade discount is $16.
Calculating the Discount Rate Next, we calculate the trade discount rate, which is the trade discount amount divided by the original price, expressed as a percentage.
Finding the Trade Discount Rate The trade discount rate is calculated as: Trade Discount Rate = Original Price Trade Discount × 100 = $100 $16 × 100 = 16% Therefore, the trade discount rate is 16%.
Final Answer The trade discount rate is 16%.
Examples
Trade discounts are commonly used by manufacturers and suppliers to encourage bulk purchases from retailers. For example, a clothing company might offer a discount on a large order of t-shirts to a retail store. If the original price for each t-shirt is $15, but the store buys them in bulk for $12 each, the trade discount helps the retailer increase their profit margin when they sell the t-shirts to consumers. Understanding trade discounts helps businesses manage costs and pricing strategies effectively.
