Sweets Bakery makes fat-free cookies that cost $1.70 each to prepare. Sweets expects 20% of the cookies to be imperfect. Sweets wants a 40% markup on cost and produces 150 cookies. Assume that Sweets can sell the broken cookies for $1.60 each. What should Sweets charge for each cookie??

Answer 1

cost for x cookies: 1.70x
For a 40% final markup, we need revenue of 1.70x * 1.40
That means for 150 cookies, the selling price p needs to satisfy

(150*0.80)p + (150*0.20)*1.60 = (150*1.70)*1.40
p = 2.575

So, sell the perfect ones for $2.58 each