A $100 speaker is sold in bulk to your store for $90. Calculate the trade discount rate.
Answer (2)
Calculate the trade discount by subtracting the selling price from the list price: D = L − S = 100 − 90 = 10 .
Calculate the trade discount rate by dividing the trade discount by the list price and multiplying by 100: R = L D × 100 = 100 10 × 100 = 10 .
The trade discount rate is 10% .
Explanation
Understanding the Problem We are given the list price and the selling price of a speaker and asked to find the trade discount rate. The list price is the original price of the speaker, and the selling price is the price the store pays for it. The trade discount is the difference between these two prices, and the trade discount rate is that difference expressed as a percentage of the list price.
Defining Variables Let's define the variables:
L = List price = $100
S = Selling price = $90
D = Trade discount
R = Trade discount rate
Calculating the Trade Discount First, we calculate the trade discount, which is the difference between the list price and the selling price: D = L − S = 100 − 90 = 10 The trade discount is $10 .
Calculating the Trade Discount Rate Next, we calculate the trade discount rate, which is the trade discount divided by the list price, expressed as a percentage: R = L D × 100 = 100 10 × 100 = 10 The trade discount rate is 10% .
Final Answer Therefore, the trade discount rate is 10% .
Examples
Trade discounts are commonly used in business to encourage bulk purchases. For example, a store might receive a trade discount on electronics they purchase from a manufacturer. If a retailer buys 100 speakers with a list price of $100 each, but only pays $90 each, the trade discount allows the retailer to increase their profit margin when they sell the speakers to consumers. This pricing strategy helps businesses manage inventory and sales effectively.
The trade discount rate for the speaker is calculated as 10%. It is determined by finding the difference between the list price and the selling price, divided by the list price, then multiplied by 100. Therefore, the trade discount rate is 10%.
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