Principles of Marketing question

[joel66]

I'm took a practice test and don't understand the answer given.

A toy manufacturing firm sold its product through a toy wholesaler, who in turn sold to appropriate retailers. The manufacture's price is $20 to the wholesaler, whose markup is usually 20 percent on the selling price to the retailer. If the retailer's markup on the selling price to the customer is 50 percent, what is the price to the customer.

24.00
30.00
36.00
37.50
50.00

I had selected 36 dollars because 20% markup of 20 dollars to retailer would make the price 24 dollars. 50% markup of 24 dollars is 12 dollars and would make the price 36 dollars.

The answer is actually 50 dollars. Can somebody help me on this?

This test is very Vague. I can't understand how somebody actually says if you watch TV you can pass this test. I read the entire Principles of Marketing a Detailed Tutorial From KnowThis.com which took 3 days, the REA study guide twice, and InstantCert twice, and scored only 28/50 on the CLEP Principles of Marketing study guide I bought for 10 bucks.

well see how my first REA practice test is going to be. Hoping to read the 70 page REA study again, and go over the InstanctCert twice more and do the three REA practice test as I have the exam this Wed :eek:

[gcalvin]

I had trouble with this kind of question at first too. It seems that when CLEP uses "markup" the meaning is what I had learned as "margin". The meaning that I had understood as "markup" they relate as "cost-based markup" or something like that. So:

Cost to wholesaler C = $20
Wholesaler markup M = 20%
Wholesaler selling price P = C / ( (100-M) / 100 ) = 20 / .8 = $25

Retailer selling price P = C / ( (100-M) / 100 ) = 25 / .5 = $50

Personally, I think it's sad that "margin" and "markup" are being confused and conflated this way, but I guess there's not much I can do about it.

[joel66]

I had trouble with this kind of question at first too. It seems that when CLEP uses "markup" the meaning is what I had learned as "margin". The meaning that I had understood as "markup" they relate as "cost-based markup" or something like that. So:

Cost to wholesaler C = $20
Wholesaler markup M = 20%
Wholesaler selling price P = C / ( (100-M) / 100 ) = 20 / .8 = $25

Retailer selling price P = C / ( (100-M) / 100 ) = 25 / .5 = $50

Personally, I think it's sad that "margin" and "markup" are being confused and conflated this way, but I guess there's not much I can do about it.

Thanks for the info, that helps a lot.

In regards to scoring, I'm confused with this marketing test. I did my first REA practice test on the computer. It says the following:

Number of Correct questions: 61
Number of incorrect questions: 39
Percent of correct questions: 61%

Your Score: 47 ???

On the book under Raw Score Conversion Chart is says scaled score is 58.

I know these are only estimates, but there is a big difference in regards to self-motivation. lol I'm hoping the CD is wrong. I still have two more practice exams to go in the next two days, don't know if I'm ready.

[PatsGirl1]

Don't quote me, because I could be wrong, but generally a 61% correct is over 50.
It would be more like a 57/58-ish (take 20-80, which is 60, then .61 of that is 37, add that to 20=57, which is about what it was on the raw score conversion chart).

Edited to explain my math, since you would have no idea where I got it from lol... Min score is 20, max is 80, so you take the difference, which is 60. Then take 61% of that for questions right since wrong ones don't count, and then add that answer to the minimum score.

But that doesn't help if any of the questions are weighted (hard questions worth more than the easy ones), since you'd have no way of calculating for that.