a business purchases an item for $2.00. they want to make a gross profit margin of 90% on the item. what do…

a business purchases an item for $2.00. they want to make a gross profit margin of 90% on the item. what do they need to price the item at? selling price = $?

a business purchases an item for $2.00. they want to make a gross profit margin of 90% on the item. what do they need to price the item at? selling price = $?

Answer

Answer:

$20$

Explanation:

Step1: Recall profit - margin formula

Gross profit margin = $\frac{\text{Selling Price}-\text{Cost Price}}{\text{Selling Price}}\times100%$. Let the selling price be $x$. The cost price is $2$. Given the gross - profit margin is $90%$ or $0.9$. So, $0.9=\frac{x - 2}{x}$.

Step2: Cross - multiply

$0.9x=x - 2$.

Step3: Rearrange the equation

$2=x-0.9x$.

Step4: Simplify the right - hand side

$2 = 0.1x$.

Step5: Solve for $x$

$x=\frac{2}{0.1}=20$.