Problem 7-24:Furniture Buys A Living Room Set With A List Price Of $ \$5,900 $ And A $ 50\% $ Trade Discount. Freight (FOB Shipping Point) Of $ \$45 $ Is Not Included In The Price. What Is The Delivered Price (including

Understanding the Problem

In this problem, we are given the list price of a living room set, which is $5,900. We are also informed that a 50% trade discount is applied to this list price. Additionally, we need to consider the freight cost, which is $45, and is not included in the price. Our goal is to calculate the delivered price of the living room set, which includes both the discounted price and the freight cost.

Calculating the Discounted Price

To calculate the discounted price, we need to apply the 50% trade discount to the list price. The formula for calculating the discounted price is:

Discounted Price = List Price - (List Price x Discount Rate)

In this case, the list price is $5,900 and the discount rate is 50% or 0.5. Plugging in these values, we get:

Discounted Price = $5,900 - ($5,900 x 0.5) = $5,900 - $2,950 = $2,950

Calculating the Delivered Price

Now that we have the discounted price, we need to add the freight cost to get the delivered price. The formula for calculating the delivered price is:

Delivered Price = Discounted Price + Freight Cost

In this case, the discounted price is $2,950 and the freight cost is $45. Plugging in these values, we get:

Delivered Price = $2,950 + $45 = $2,995

Conclusion

In this problem, we calculated the delivered price of a living room set by applying a 50% trade discount to the list price and adding the freight cost. The list price of the living room set is $5,900, and the freight cost is $45. After applying the discount, the discounted price is $2,950, and adding the freight cost gives us a delivered price of $2,995.

Key Takeaways

• The list price of the living room set is $5,900.
• A 50% trade discount is applied to the list price.
• The freight cost is $45 and is not included in the price.
• The discounted price is $2,950.
• The delivered price is $2,995.

Real-World Application

This problem has real-world applications in business and finance. When purchasing goods or services, businesses often need to calculate the delivered price, which includes both the discounted price and any additional costs such as freight. This calculation is essential in determining the total cost of the purchase and making informed decisions about investments.

Common Mistakes

When calculating the delivered price, it's essential to avoid common mistakes such as:

• Forgetting to apply the discount to the list price.
• Not including the freight cost in the calculation.
• Using the wrong discount rate or freight cost.

By avoiding these mistakes and following the correct formula, businesses can accurately calculate the delivered price and make informed decisions about their investments.

Conclusion

Frequently Asked Questions

In this article, we will answer some frequently asked questions about delivered price, including its calculation, real-world applications, and common mistakes.

Q: What is delivered price?

A: Delivered price is the total cost of a product or service, including both the discounted price and any additional costs such as freight.

Q: How is delivered price calculated?

A: Delivered price is calculated by applying a discount to the list price and adding the freight cost. The formula for calculating delivered price is:

Delivered Price = Discounted Price + Freight Cost

Q: What is the difference between list price and delivered price?

A: The list price is the original price of a product or service, while the delivered price is the total cost, including any discounts and additional costs such as freight.

Q: Why is delivered price important?

A: Delivered price is important because it helps businesses and individuals make informed decisions about investments. It takes into account both the discounted price and any additional costs, providing a more accurate picture of the total cost.

Q: What are some common mistakes to avoid when calculating delivered price?

A: Some common mistakes to avoid when calculating delivered price include:

• Forgetting to apply the discount to the list price.
• Not including the freight cost in the calculation.
• Using the wrong discount rate or freight cost.

Q: How can I avoid common mistakes when calculating delivered price?

A: To avoid common mistakes when calculating delivered price, make sure to:

• Apply the discount to the list price correctly.
• Include the freight cost in the calculation.
• Use the correct discount rate and freight cost.

Q: What are some real-world applications of delivered price?

A: Delivered price has real-world applications in business and finance, including:

• Purchasing goods or services.
• Making informed decisions about investments.
• Calculating total costs.

Q: Can delivered price be used in other industries?

A: Yes, delivered price can be used in other industries, including:

• Manufacturing.
• Retail.
• Wholesale.

Q: How can I calculate delivered price in a spreadsheet?

A: To calculate delivered price in a spreadsheet, you can use the following formula:

Delivered Price = List Price - (List Price x Discount Rate) + Freight Cost

Q: What is the formula for calculating delivered price in Excel?

A: The formula for calculating delivered price in Excel is:

= List Price - (List Price x Discount Rate) + Freight Cost

Conclusion

In conclusion, delivered price is an important concept in business and finance that helps individuals and businesses make informed decisions about investments. By understanding how to calculate delivered price and avoiding common mistakes, you can make more accurate calculations and make better decisions.