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Difficulty: MediumProfit and Loss

A boutique owner purchases 5050 plain canvas tote bags at a wholesale price of $8.00\$8.00 each. She pays a flat shipping fee of $100.00\$100.00 for the entire order and spends an additional $2.50\$2.50 per bag for custom screen printing. If she wants to make a 40%40\% profit on her total investment, what must be the selling price for a single custom tote bag?

  1. A
    $12.90\$12.90
  2. B
    $13.00\$13.00
  3. C
    $15.70\$15.70
  4. $17.50\$17.50Answer

Answer

$17.50\$17.50
To find the selling price, the total cost per bag must first be established by combining the wholesale price, the per-bag shipping cost, and the printing fee ($8.00+$2.00+$2.50=$12.50\$8.00 + \$2.00 + \$2.50 = \$12.50). Finding 40%40\% of this comprehensive cost yields a $5.00\$5.00 profit, resulting in a final selling price of $17.50\$17.50.

Step-by-Step Solution

1
Calculate the total cost investment per individual tote bag, including all overhead expenses.
Wholesale: $8.00\$8.00. Shipping per bag: $100.00÷50=$2.00\$100.00 \div 50 = \$2.00. Printing: $2.50\$2.50. Total Cost = $8.00+$2.00+$2.50=$12.50\$8.00 + \$2.00 + \$2.50 = \$12.50.
Profit must be calculated on the total investment, which includes base cost, shipping, and modifications.
2
Determine the required profit amount per bag by calculating 40%40\% of the total cost.
40% of $12.50=0.40×12.50=$5.0040\% \text{ of } \$12.50 = 0.40 \times 12.50 = \$5.00.
The question asks for a 40%40\% profit margin on the total cost.
3
Add the calculated profit amount to the total cost to find the final selling price.
$12.50 (Total Cost)+$5.00 (Profit)=$17.50\$12.50 \text{ (Total Cost)} + \$5.00 \text{ (Profit)} = \$17.50.
The selling price is the sum of the total cost and the desired profit.

Key Concept

Calculating selling price based on total investment (cost plus overhead) and a desired profit percentage.
Estimated Time:1m 15s
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Topics

Profit and Loss

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