Question

The Mills Lunch Shop prepares fresh take-out entrees each day. On Tuesday, 40 baked chicken dinners were prepared at a cost of $3.20 each. A 20% spoilage rate is anticipated. Mills Lunch Shop sells the dinners at an 80% markup based on cost. They decided to offer a $1.00-off coupon in a newspaper advertisement. What markdown percentage does this coupon represent

Answer 1

cost: 40*3.20 = 128.00
after spoilage there are only 32 dinners to sell

Now, if the 32 dinners are supposed to cover the entire cost + 80% markup, that would mean they must sell at a price p such that

32p = 1.80*128
p = 7.20

So, the $1 discount is a 13.9% discount off the marked price.