a business purchases an item for $3.25. they want to make a gross profit margin of 60% on the item. what do…

a business purchases an item for $3.25. they want to make a gross profit margin of 60% on the item. what do they need to price the item at? selling price = $? round to the nearest cent.

a business purchases an item for $3.25. they want to make a gross profit margin of 60% on the item. what do they need to price the item at? selling price = $? round to the nearest cent.

Answer

Explanation:

Step1: Recall gross - profit - margin formula

The gross - profit - margin formula is $\text{Gross Profit Margin}=\frac{\text{Selling Price}-\text{Cost Price}}{\text{Selling Price}}$. Let the selling price be $x$. The cost price is $$3.25$ and the gross - profit margin is $0.6$. So, $0.6=\frac{x - 3.25}{x}$.

Step2: Cross - multiply

Cross - multiplying gives $0.6x=x - 3.25$.

Step3: Rearrange the equation

Subtract $0.6x$ from both sides: $0=x - 0.6x-3.25$. Then simplify the right - hand side: $0 = 0.4x-3.25$.

Step4: Solve for $x$

Add $3.25$ to both sides: $3.25 = 0.4x$. Then divide both sides by $0.4$: $x=\frac{3.25}{0.4}=8.125$.

Answer:

$$8.13$