Question

If the unit selling price is $2.50 unit costs $1.00 what is the margin percentage when the unit costs increased &.025

Answer 1

The price is 3.13

Explanation:

In order to find this you must first calculate out the current gross margin percentage. You can find this using the equation below.

Gross Margin = cost /price

Gross Margin = 1/2.5

As

40% = Gross Margin

Now we need to use the same equation with a new cost to find price.

Cost / Price = Gross Margin

1.25 / Price = 40%

1.25/.40 = Price

3.13 = Price

Answer 2

$3.125

Explanation:

Selling Price = $2.50

Unit Cost = $1.00

Gross margin = (Unit cost/Selling price)*100

= (1/2.5)*100

Gross margin = 40%

Unit cost increased by 0.25.

New unit cost = $1.00 1+ $0.25 = $1.25

Selling price =( Unit cost/Gross margin)*100

Selling price =[ (1.25)/40]*100

= 125/40

Selling price = $3.125

Increases the unit selling price to $3.125

Hope this will helpful.

Thank you.