Step-by-step explanation:
the original retail price was 120% of the manufacturer price (100% manufacturer price + 20% markup).
now, the whole retail price is reduced by 12%.
that means we have to subtract 12% from the 120%.
but careful, we cannot just do 120-12=108.
that is simply because these 120% are now for this calculation the new basic amount and therefore 100%.
we actually need to calculate and subtract 12% of 120 to get the new percentage over the manufacturer price.
we do this by multiplying 120 by (100-12)/100 = 88/100 = 0.88 :
120 × 0.88 = 105.6%
so, the new retail price is now only 5.6% over the manufacturer price.
