Burley Sports retails regualr helmets for $80. Burley obtains thises from the factory at $55. Overhead expenses are 20% of the selling price.
a) the amount of the mark-up
b) the rate of mark-up based on cost
c) the rate of mark-up based on selling price
d) the profit for each helmet
I'll get you started. Then we'll be glad to check your other answers.
a)
$80 - 55 = $25 >> amount of mark-up.
To answer each of these questions, we will break down the information provided step by step.
a) The amount of the mark-up:
To calculate the mark-up amount, we subtract the cost price (what Burley pays the factory) from the selling price (what customers pay). In this case, the selling price is $80 and the cost price is $55.
Markup amount = Selling price - Cost price
Markup amount = $80 - $55
Markup amount = $25
Therefore, the mark-up amount for each helmet is $25.
b) The rate of mark-up based on cost:
To calculate the rate of mark-up based on cost, we divide the mark-up amount by the cost price and then multiply by 100 to express it as a percentage.
Rate of mark-up based on cost = (Markup amount / Cost price) * 100
Rate of mark-up based on cost = ($25 / $55) * 100
Using a calculator, we find that the rate of mark-up based on cost is approximately 45.45%.
c) The rate of mark-up based on selling price:
To calculate the rate of mark-up based on selling price, we divide the mark-up amount by the selling price and then multiply by 100 to express it as a percentage.
Rate of mark-up based on selling price = (Markup amount / Selling price) * 100
Rate of mark-up based on selling price = ($25 / $80) * 100
Using a calculator, we find that the rate of mark-up based on selling price is approximately 31.25%.
d) The profit for each helmet:
To calculate the profit for each helmet, we need to consider the overhead expenses. The overhead expenses are given as 20% of the selling price. So, we subtract the overhead expenses from the mark-up amount to get the profit.
Profit = Markup amount - Overhead expenses
Overhead expenses = 20% of Selling price
Overhead expenses = 20/100 * $80
Overhead expenses = $16
Profit = $25 - $16
Profit = $9
Therefore, the profit for each helmet is $9.