If the gross profit rate on the sale of a radio is 28% of the selling price, what is the gross profit rate based on the cost of the radio?
say we sold for 100 dollars
we made 28 dollars
and it cost 100 -28= 72 dollars
so
we made 28 dollars on an item costing us 72 dollars
28/72 = .388 = 38.8 %
To calculate the gross profit rate based on the cost of the radio, we need to understand the relationship between the selling price, the cost of the radio, and the gross profit.
The gross profit is the difference between the selling price and the cost of the radio. It represents the amount of money left after deducting the cost of goods sold.
Let's assume the selling price of the radio is "S" and the cost of the radio is "C." We can calculate the gross profit by subtracting the cost from the selling price: Gross Profit = S - C.
The gross profit rate is expressed as a percentage, which represents the proportion of gross profit to the selling price. Mathematically, it can be calculated using the following formula:
Gross Profit Rate = (Gross Profit / Selling Price) * 100
Given that the gross profit rate on the sale of a radio is 28% of the selling price, we can set up the equation as:
28% = (Gross Profit / Selling Price) * 100
To find the gross profit rate based on the cost of the radio, we need to solve for the gross profit as a percentage of the cost:
Gross Profit = Selling Price * Gross Profit Rate / 100
Once we have the gross profit, we can calculate the gross profit rate based on the cost of the radio using the following formula:
Gross Profit Rate based on cost = (Gross Profit / Cost) * 100
Now, let's proceed with the calculations.