Mary buys 8 widgets for $40.00. She adds $1.00 in enhancements to each widget and sells them for $9.00 each. What is Mary's estimated gross profit margin?
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To find Mary's estimated gross profit margin, we need to calculate her total revenue and her total cost.
First, let's calculate her total revenue. Mary sells each widget for $9.00, and she bought 8 widgets. So her total revenue is 8 widgets multiplied by $9.00 per widget:
Total revenue = 8 widgets * $9.00/widget = $72.00
Next, let's calculate her total cost. Mary bought 8 widgets for $40.00, and she added $1.00 in enhancements to each widget. So her total cost is the cost of the widgets plus the cost of enhancements:
Total cost = Cost of widgets + Cost of enhancements
= $40.00 + ($1.00/widget * 8 widgets)
= $40.00 + $8.00
= $48.00
Now that we have Mary's total revenue and total cost, we can calculate her estimated gross profit:
Gross profit = Total revenue - Total cost
= $72.00 - $48.00
= $24.00
Finally, to calculate Mary's estimated gross profit margin, we divide the gross profit by the total revenue and multiply by 100 to get a percentage:
Gross profit margin = (Gross profit / Total revenue) * 100
= ($24.00 / $72.00) * 100
= 33.33%
Therefore, Mary's estimated gross profit margin is approximately 33.33%.