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 = $?

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 = $?

Answer

Explanation:

Step1: Recall gross - profit - margin formula

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

$0.6x=x - 3.25$.

Step3: Rearrange the equation

$x-0.6x = 3.25$.

Step4: Simplify the left - hand side

$0.4x=3.25$.

Step5: Solve for $x$

$x=\frac{3.25}{0.4}=8.125$.

Answer:

$8.125$