The Following Questions are linked to this scenario: A firm wishes to calculate its maximum acceptable costs under two scenarios: direct or indirect distribution.
-Under the direct distribution option, the firm would sell its shoes directly via the Internet. The firm's selling price cannot exceed $159 for its line of quality men's shoes. If it requires a 40 percent markup (at retail), its maximum acceptable merchandise costs
A) are $63.60.
B) are $95.40.
C) are $119.00.
D) cannot be determined based on the data provided.

Question

Quizplus · Accepted Answer

To find the maximum acceptable merchandise costs, calculate the cost price using the formula: Selling Price = Cost Price + Markup. If the selling price is $159 and the markup is 40% of the selling price, then the cost price is 60% of the selling price. Thus, the maximum acceptable merchandise cost is 60% of $159, which is $95.40.

The Following Questions Are Linked to This Scenario: a Firm