Ellis Dover is a scout for a Major League Baseball team based in Phoenix, Arizona. Ellis needs to travel to Los Angeles, California on June 1 to perform a variety of professional functions prior to the team travelling to Los Angeles to play. If Ellis flies, he could catch a 6 a.m. flight on June 1. In order to perform all of his professional responsibilities, Ellis will need to spend the night and catch a flight on June 2 to return to Phoenix. If Ellis flies, he will need to rent a car for $38 per day. To cover meals and other incidental expenses, Ellis will receive $45 per day (per diem) for each day he works out of town. Flights between Phoenix and Los Angeles can be purchased for $89 one way.
Phoenix is approximately 300 miles from Los Angeles, a 5-hour drive at speed limits permitted on the freeways connecting the two cities. If he drives from Phoenix to Los Angeles, Ellis would need to leave the afternoon of May 31 and would be reimbursed $.50 per mile. He would need to spend 2 nights in a hotel, the night of May 31 and the night of June 1. He would return to Phoenix by car on June 2. The hotel used by the team charges $160 per night. What is the incremental cost of driving over flying?
◦ $116
◦ $251
◦ $296
◦ $101
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Cost = $99.49; Rate of markup based on cost = 32%. Find the markup and selling price.