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URGENT: Easy Math help needed

case math
Recent activity on Mar 15, 2018
2 Answers
2.6 k Views
Katharina asked on Mar 15, 2018

Ok guys, it is really painfull to ask, because the question is easy, but I need help anyway:

I need the cost price of a Liter Beer:

1 Liter has the price to costumer 10€

Margin is 200 % in one distribution area and 150% in another distribution area

How do I calculate the cost for a liter Beer out of this?

(I know the answer should be 1.33 - but how do I get there?)

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Anonymous A updated the answer on Mar 15, 2018

I would work backwards. But first, let's start with simple stuff. If the cost is €1 and the margin is 200%, this means that the sale price is €3 -> cost price x (1 + margin). So working backwards it is (whole)sale price / (1 + margin).

In your case:

€10 / (1 + 200%) = €10 / 3 = €3.33 and from there...

€3.33 / (1 + 150%) = €3.33 / 2.5 = €1.33

(edited)

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Katharina on Mar 15, 2018

Thanks a lot! I think, i just saw, what I missed out: Take it as a two step approach... THANKS a lot!

Vlad
Expert
updated an answer on Mar 15, 2018
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

Not sure I understand correctly. First of all, what is "cost price"?

Secondly, Margin cannot be 200%. Simply because the margin is a % of price.

  • Most probably you are talking about the Markup. Markup = % of costs
  • If the Markup is 200%, price = 10€, then the cost is 1/3 of price and markup is 2/3 of price.
  • Thus the cost = Price / 3 = 3.33€

Best,

(edited)

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Katharina on Mar 15, 2018

Hey Vlad, the data is 1:1 from a case coaching I just had, so this is correct - margin in this case means profit margin. Maybe I missused the wording.

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