Question

Jim makes and sells denim knapsacks for $10.50 apiece. The knapsacks cost $7 apiece to produce.

Jim makes ____% profit on each knapsacks.

Show your work.

A. 33
B. 50
C. 75
D. 125

Answer 1

In this problem, to solve for the gross profit, you have to deduct the cost of each knapsack to its selling price.

The gross profit of Jim is $3.50 ($10.50 - $7).

To compute the gross profit rate, you have to divide the gross profit ($3.50) to the cost of each knapsack ($7).

$3.50 / $7 = 0.5 or 50%

Therefore, Jim makes 50% profit on each knapsack.