Question

Francis works for a local fly fishing shop. The shop allows employees to purchase two fly rods per year at a discount. This year Francis purchased one rod. The rod normally retails for $300, was purchased by the shop for $225, and sold to Francis for $250. If the average gross profit percentage of the shop's goods is 20%, what is the profit made by the shop on the sale of the rod to Francis?

1) $0
2) $25
3) $60
4) Some other amount

Answer 1

The profit made by the shop on the sale of the rod to Francis is $25.

Step-by-step explanation:

To calculate the profit made by the shop on the sale of the rod to Francis, we need to determine the cost and selling price of the rod to the shop. The rod was purchased by the shop for $225 and sold to Francis for $250. The difference between these two prices is the profit margin for the shop. The profit can be calculated as follows:

Selling Price - Purchase Price = Profit

$250 - $225 = $25

Therefore, the profit made by the shop on the sale of the rod to Francis is $25, which is option 2.