Raymond Ltd bought an inventory item for $1,080 less 33 1/3% and 8 1/3%. Overhead for the company is 18% of regular selling price and required profit is 15% of regular selling price. The item was marked at a price so that the company was able to advertise a discount of 25% while still maintaining its profit margin. To clear the inventory, the remaining inventory was marked down 37.5%.

a).What operating profit or loss is realized at the clearance price?

b).What is the realized rate of markup based on cost?