Question

A furniture store buys 100 footstools from a distributor at a cost of $230 each plus an overhead charge of $50 per order. The retail markup is 25% on the total price paid. Find the profit on the sale of one footstool.

Answer 1

Answer:

The profit on the sale of one footstool is $57.625

Explanation:

The steps for computing the profit on the sale of one footstool:

1. First, we have to compute the overhead cost per footstools. It is shown below:

= Overhead charge ÷ number of footstools

= $50 ÷ 100

= 0.5

2. Then add the overhead cost per footstools with the cost price

So, the value would be equal to

= Cost price + overhead cost for per footstools

= $230 + 0.5

= $230.5

3. After that, multiply the step 2 amount with the retail markup percentage.

So, the profit would be equal to

= Step 2 amount × retail markup percentage

= $230.5 × 25%

= $57.625