 # Examples Of Trade Discount

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QUESTION 1 Define net price. How do you calculate the list price when the net price and trade discount rate are known? What are the steps to calculate the net price equivalent rate and then how to get the net price? What are the steps to calculate the single equivalent discount rate and then how to get the trade discount amount? Give an example of each net price equivalent rate and single equivalent discount rate. a) Define net price The net price is the final price after deducting all discounts and rebates. Which is the value of product or service is sold after all taxes and other costs are added and all discounts subtracted. The two methods for computing trade discount are the discount method and the complement method. We can use both…show more content…
The list price is \$110 and Adele qualifies for a 30% trade discount. Compute the net price using the discount method. STEP 1: Discount = 0.30 X \$110 = \$33 STEP 2: Net price = \$110 - \$33 = \$77 Compute net price with the complement method Mira Restaurant Supply sells a set of stainless steel trays to Adele’s Bagels. The list price is \$110, and Adele qualifies for a 30% trade discount. Compute the net price using the complement method. STEP 1: Complement rate = 100% -30% = 70% STEP 2: Net price = 0.70 X \$110 = \$77 b) How do you calculate the list price when the net price and trade discount rate are known? Firstly, to get the price list we have to subtract the discount rate from 100% get the complement rate. Next, we must divide the net price with the complement…show more content…
To calculate net price equivalent rate, follow these two steps. Example: Elly from Elly’s Fireplace orders 6 gas stainless steel stoves with a list price of \$1000 each from his supplier, Ranfort Fire. The supplier offer a chain discount of 5/10. What is net price of the 6 fireplaces? STEP 1: Subtract each discount from 100% 100% - 5% = 95% 100% - 10% = 90% STEP 2: Multiply them together. 95% X 90% 0.95 X 0.90 = 0.855 ( Net price equivalent rate ) Net price = List Price X Net Price Equivalent Rate = ( \$1,000 X 6 fireplaces ) X 0.855 = \$5,130 d) What are the steps to calculate the single equivalent discount rate and how to get the trade discount? Firstly, we must compute the complement of each rate. Next, multiply all the complement rate as decimal and write the product as a percent. Then, subtract the product from 100% to get the equivalent single discount rate. We can use the equivalent single rate to get the trade discount by multiply the equivalent single discount rate with the list price. For example: The tractor list price is \$3200, series of discounts: 25%, 20%, and 10%. find the equivalent single discount rate. Using that, calculate the trade