Question

A pharmacy in the UK buys paracetamol, a painkiller known in North America as acetaminophen, for 0.57pound and sells them for 1.39 pound . What is the gross margin %? Due to supply chain interruption the cost of the some of the ingredients rise and the manufacturer increases the cost of the paracetamol to 0.67 pound from 0.57 pound . The selling price stays at 1.39 pound. What is the new margin %? The cost price remains at the 0.67 pound and to take advantage of the COVID-19 panic among consumers the pharmacy changes the selling price to 9.99 pound. What is the new margin %? How anxious are parents?

Answer 1

1. A pharmacy in the UK buys paracetamol, a painkiller known in North America as acetaminophen, for 0.57pound and sells them for 1.39 pound . What is the gross margin %?

Gross Margin = (Selling price - Cost) / Selling price) * = (1.39 - 0.57) / 1.39 = 0.82 / 1.39 = 58.99%

Due to supply chain interruption the cost of the some of the ingredients rise and the manufacturer increases the cost of the paracetamol to 0.67 pound from 0.57 pound . The selling price stays at 1.39 pound. What is the new margin %?

Gross Margin = (Selling price - Cost) / Selling price) * = (1.39 - 0.67) / 1.39 = 0.72 / 1.39 = 51.80%

The cost price remains at the 0.67 pound and to take advantage of the COVID-19 panic among consumers the pharmacy changes the selling price to 9.99 pound. What is the new margin %?

Gross Margin = (Selling price - Cost) / Selling price) * = (9.99 - 0.67) / 9.99 = 9.32 / 9.99 = 93.29%