Question

A store has been selling a special starter Wakeboard kit for $500.00, providing the store with a 40% contribution margin. For staff, the store will sell the Wakeboard kit for $385.00. What % above the stores cost-base is a staff member able to purchase the starter Wakeboard kit?

Answer 1

Ans. Contribution margin = 40%

Selling price = $ 500

Selling price for staff = $ 385

Cost of wakeboard kit =  Selling price - Contribution

= $ 500 - $ 500 * 40%

= $ 500 - $ 200

= $ 300

Profit on sale to staff member = $ 385 - $ 300

= $ 85  

Percentage above the stores cost-base is a staff member able to purchase the starter Wakeboard kit

= (Profit on sale to staff member / Cost of wakeboard kit) * 100

= $ 85 / $ 300 * 100

= 28.33%

Note : Feedback would be appreciated (Thumps up).