Question

Sketetal Income Statement Dollars 100% Retail Price - Cost Retail Price (=) Gross Margin % (+) Sales (retail) (-) Cost of Sales (a) Gross Profit (-) Expenses (=) Profit Dollars $ 100.00 $ 40.00 $ 60.00 $ 20.00 $ 40.00 % 100% 40% 60% 20% 40% Retail Price - Cost Cost (=) Markup % Cost $ Cost % (6) Retail Price $ 1. A store purchased 125 iPods for $3500.00 - what was the average price per iPod if they sold with a 30% gross margin? 2. The cost of a iPhone is $256.00 to Walmart and they want to earn a 74% GM-What is the customer's price? 3. Apple sells there new iPhone for $1,299.00 and has a gross Margin of 58% - what is the cost to produce? 4. Walmart sells an iPhone for $599.99 and it costed them $136.65 to produce - what is the markup %? 5. Walmart purchased iPhones for $200.00 each and wants to sell them with 66% GM - what is the customer's price?

I honestly just don't know how to set up the formulas to get the desired answers.

Answer 1

1)

Retail price - cost Gross margin = ? Retail price

0.30 = Retail price - $3500 Retail price

Retail price = $ 3500 $\div$ (1 - 0.30 )

Retail price = $ 5000

Average price per iPod = $ 5000 $\div$ 125

Average price per iPod = $ 40

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2)

Retail price - cost Gross margin = ? Retail price

0.74 = Retail price - $256 Retail price

Customer's price = $ 256 $\div$ ( 1 - 0.74)

Customer's price = $ 984.62

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3)

Retail price - cost Gross margin = ? Retail price

0.58 = $1299 - cost $1299

Cost to produce = $ 1299 - 0.58 $\times$ $ 1299

Cost to produce = $ 545.58

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4)

Markup % = Retail price -cost cost

$599.99 - $136.65 Markup % = $136.65

Markup % = 339.1%

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5)

Retail price - cost Gross margin = ? Retail price

0.66 = Retail price - $200 Retail price

Customers price = $ 200 $\div$ ( 1 - 0.66)

Customers price = $ 588.24