Examkin

Question

Difficulty: MediumProfit and Loss

A florist purchases 120120 wholesale roses for \50.00andpaysanadditional$30.00forcoldshipping.Upondelivery,50.00 and pays an additional \$30.00 for cold shipping. Upon delivery, 24 oftherosesarefoundtobedamagedandcannotbesold.Ifthefloristsellstheremainingrosesinbunchesofonedozen( of the roses are found to be damaged and cannot be sold. If the florist sells the remaining roses in bunches of one dozen ( 12$ roses) for \$12.50 per bunch, what is the florist's profit percentage on the total investment?

  1. A
    20%20\%
  2. 25%25\%Answer
  3. C
    100%100\%
  4. D
    125%125\%

Answer

25%25\%
To find the profit percentage, first calculate the total investment: \50.00fortherosesplus$30.00forshippingequalsatotalcostof$80.00.Next,findthesellableinventorybysubtractingthe50.00 for the roses plus \$30.00 for shipping equals a total cost of \$80.00. Next, find the sellable inventory by subtracting the 24 damagedrosesfromtheoriginal damaged roses from the original 120 ,leaving, leaving 96 roses.Sincetheyaresoldbythedozen,divide roses. Since they are sold by the dozen, divide 96 by by 12 toget to get 8 bunches.Selling bunches. Selling 8 bunchesat$12.50eachgenerates$100.00intotalrevenue.Subtractthetotalcostfromtherevenuetofindtheprofit:$100.00−$80.00=$20.00.Finally,dividetheprofitbythetotalcosttofindthepercentage:$20.00÷$80.00=0.25 bunches at \$12.50 each generates \$100.00 in total revenue. Subtract the total cost from the revenue to find the profit: \$100.00 - \$80.00 = \$20.00. Finally, divide the profit by the total cost to find the percentage: \$20.00 \div \$80.00 = 0.25, which is 25%25\%.

Step-by-Step Solution

1
Calculate the total cost (investment).
\$50.00 + \$30.00 = \$80.00
Profit percentage must be calculated using the entire cost basis, including overhead like shipping.
2
Determine the number of sellable bunches.
120−24=96120 - 24 = 96 sellable roses. 96÷12=896 \div 12 = 8 bunches.
Damaged goods cannot be sold and must be subtracted from inventory before calculating revenue.
3
Calculate the total revenue.
$8×$12.50=$100.008 \times \$12.50 = \$100.00
Multiply the number of sellable units by the price per unit.
4
Calculate the profit and the profit percentage.
Profit = \$100.00 - \$80.00 = \$20.00. Percentage = (\$20.00 \div \$80.00) \times 100\% = 25\%.
Profit is revenue minus cost. Profit percentage is the profit divided by the total cost.

Key Concept

Calculating percentage profit requires finding the comprehensive total cost, determining actual total revenue (accounting for lost inventory), subtracting cost from revenue to find the profit amount, and then dividing that profit strictly by the total original cost.
Estimated Time:1m 30s
Rate this question

Topics

Profit and Loss

More questions from this topic