Question 7 TGP Inc uses a markup of 35% of Cost on all merchandise it sells. Overhead expenses are 8% of Sales. a) What is the selling price of inventory that has a unit cost of $15? I b) How much profit is TGP Inc making on this inventory?

Answer 1

a) To calculate the selling price, we need to add the markup percentage to the unit cost.

Markup = 35% of Cost = 0.35 * $15 = $5.25

Selling Price = Unit Cost + Markup = $15 + $5.25 = $20.25

b) To calculate the profit, we need to subtract the unit cost and overhead expenses from the selling price.

Unit Cost = $15

Overhead Expenses = 8% of Sales = 0.08 * $20.25 = $1.62

Profit = Selling Price - Unit Cost - Overhead Expenses
= $20.25 - $15 - $1.62
= $3.63

TGP Inc is making a profit of $3.63 on this inventory.