A hardware store bought a gross (12 dozen) of hammers, paying $602.40 for the to

Question

A hardware store bought a gross (12 dozen) of hammers, paying $602.40 for the total order. The retailer estimated operating expenses for this product to be 35% of sales, and wanted a net profit of 5% of sales. The retailer expected no markdowns. What retail selling price should be set for each hammer? [Hint: The way to handle this problem is to say that the Gross Profit Margin has to cover the 35% of expenses applicable to the product plus the 5% of net profit wanted. And once you know the GPM%, you know the Cost percentage of the Selling Price. ]

Show work (calculations), no excel.

Explanation / Answer

let the selling price be S

hence S-0.05S=602.40 + 0.35S

hence 0.6S=602.40

S=602.40/0.6=1004

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