Question

A pair of men's skates at sports Store sells for $65. The gross profit margin is 40% and the operating expenses are 20% of the cost. What is the profit for each pair of skates sold ? (Answer is $18.20 .. please make sure formula matches this answer) ty

Answer 1

Let the cost of a pair of men's skates at the sports Store be $ x. Since the gross profit margin is 40%, hence the selling price is 140% of $ x = $ 1.4x. Now, since a pair of men's skates at sports Store sells for $65, hence 1.4x = 65 so that x = 65/1.4 = 46.43 ( on rounding off to 2 decimal places).

Further, the operating expenses are 20% of the cost i.e. $ 0.2x = $ 9.29. Thus, the profit for each pair of skates sold is Selling price -cost-operating expenses = $ 65-46.43-9.29 = $ 9.28.

Note:

With the given data, an operating profit of $ 18.20 is incorrect.