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22 May, 07:25

Rhine Company sets price equal to cost plus 40%. Recently, Rhine charged a customer a price of $280 for an item.

What was the cost of the item to Rhine?

a. $580

b. $340

c. $200

d. $185

e. $120

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Answers (1)
  1. 22 May, 07:51
    0
    Option (C) is correct.

    Explanation:

    Given that,

    Price of an item charged by the Rhine company = $280

    Rhine company sets price = Cost + 40% of cost

    Let the cost of an item to Rhine be x,

    Hence,

    Price = x + 40% (x)

    $280 = x + 0.4x

    $280 = 1.4x

    x = $280 : 1.4

    = $200

    Profit for Rhine = Price - cost

    = $280 - $200

    = $80

    Therefore, the cost of the item to Rhine is $200.
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