Question

A manufacturer estimates that consumers will accept a price of $275 for a snowboard. if the manufacturer expects to offer trade discounts of 35/15/5 to retailers, wholesalers, and jobbers, respectively, what price will the manufacturer receive for the snowboard?

Answer 1

To find the manufacturer's price, simply multiply the consumer price by (1-[each of the three discounted prices]). At a $275 consumer price, multiply this by (1-.35) * (1-.15) * (1-.05), or (275 * 0.65 * 0.85 * 0.95). This will give a price of approximately $144.34, which is the price the manufacturer will receive for the snowboard.