Question

Hair World is considering a contract to sell merchandise to a hair salon chain for $16,000. This merchandise will cost Hair World $10,480. What would be the increase (or decrease) to Hair World’s gross profit and gross profit percentage? (Round "Gross Profit Percentage" to 1 decimal place.)

Answer 1

The increase of $5,520 to Hair World’s gross profit and by 34.5% gross profit percentage.

Step-by-step explanation:

Gross profit is the actual return that company receive after deducting all the cost associated with the production of product. It will be calculated by deducting cost of goods sold from the revenue generated from the sale of that product.

Selling price of merchandise = $16,000

Cost of Merchandise = $10,480

Gross profit = Price - Cost = $16,000 - $10,480 = $5,520

Gross profit margin = ( Gross profit / Sales ) x 100 = ( $5,520 / $16,000 ) x 100 = 34.5%