Africa Traders is not a registered VAT vendor and buys and sells furniture. Africa Traders sold a dining room table for R8 300. The mark-up percentage on cost is 25%.What is the cost price of the product?Instructions for numeric response:1. Please round your answer to the nearest rand (eg: 1000)2. Only show the amount, do not show the "R" (eg: 1000)
Question
Africa Traders is not a registered VAT vendor and buys and sells furniture. Africa Traders sold a dining room table for R8 300. The mark-up percentage on cost is 25%.What is the cost price of the product?Instructions for numeric response:1. Please round your answer to the nearest rand (eg: 1000)2. Only show the amount, do not show the "R" (eg: 1000)
Solution
To find the cost price of the product, we need to understand that the selling price is made up of the cost price and the markup.
Given that the markup percentage on cost is 25%, this means that the selling price represents 125% of the cost price (100% cost price + 25% markup).
So, to find the cost price, we can set up the equation:
Selling Price = 125% of Cost Price
We can rearrange this to find the cost price:
Cost Price = Selling Price / 125%
Substituting the given selling price of R8 300, we get:
Cost Price = 8300 / 1.25
After performing the division, we get the cost price as R6 640.
So, the cost price of the product is R6 640.
Following the instructions, we round this to the nearest rand and remove the "R", giving us the final answer: 6640.
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