selling price in order to make money by selling a product, you need to sell it for more than it...
TRANSCRIPT
Selling Price
In order to make money by selling a product, you need to sell it for more than it costs.
How do you determine how much to charge for a product?
Lesson Objective
Determine the net profit in dollars.
Content Vocabulary
operating expensesoperating expenses
Also known as overhead, the costs of running a business, such as wages and salaries of employees, rent, utility charges, and taxes.
operating expenses
Also known as overhead, the costs of running a business, such as wages and salaries of employees, rent, utility charges, and taxes.
Sport Shop purchases water tubes for $44.98 each.
It sells the tubes for $89.99 each.
The owner estimates the overhead expenses to be 40 percent of the selling price of the merchandise.
What is the net profit on each tube?
Example 1Example 1
Find the markup.
Selling Price – Cost
$89.99 – $44.98 = $45.01
Example 1 Answer: Example 1 Answer: Step 1Step 1
Find the overhead.
Selling Price × Overhead Percent
$89.99 × 40% = $35.996 or $36.00
Example 1 Answer: Example 1 Answer: Step 2Step 2
Find the net profit.
Markup – Overhead
$45.01 – $36.00 = $9.01
Example 1 Answer: Example 1 Answer: Step 3Step 3
Anamarie’s Shoppe buys chemises at a cost of $12.78. Anamarie’s sell the chemises at a selling price of $24.49. Its management estimates the overhead expenses to be 34 percent of the selling price of the merchandise.
What is the net profit on each chemise sold?
Example 2Example 2
Find the markup.
Selling Price – Cost
$24.49 – $12.78 = $11.71
Example 2 Answer: Example 2 Answer: Step 1Step 1
Find the overhead.
Selling Price × Overhead Percent
$24.49 × 34% = $8.3266 or $8.33
Example 2 Answer: Example 2 Answer: Step 2Step 2
Find the net profit.
Markup – Overhead
$11.71 – $8.33 = $3.38
Example 2 Answer: Example 2 Answer: Step 2Step 2
Find the markup, overhead, and net profit.
Selling price: $124.99
Cost: $71.59
Overhead: 40 percent of selling price
Practice 1Practice 1
Markup: $53.40
Overhead: $50.00
Net profit: $3.40
Practice 1 AnswerPractice 1 Answer
Find the markup, overhead, and net profit.
Selling price: $189.50
Cost: $123.56
Overhead: 25 percent of selling price
Practice 2Practice 2
Markup: $65.94
Overhead: $47.38
Net profit: $18.56
Practice 2 AnswerPractice 2 Answer