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Question

Difficulty: HardProfit and Loss

Match each retail and investment scenario to its correct net profit or net loss percentage. (Note: Calculate percentages based on total cost).

  • Purchase a used motorcycle for $2,000\$2,000, spend $500\$500 on parts, and sell it for $3,000\$3,000.20%20\% net profit
  • Buy 100100 wholesale jackets at $15\$15 each plus $100\$100 total shipping. Sell 8080 jackets at $25\$25 each and discard the rest.25%25\% net profit
  • Acquire a commercial trailer for $15,000\$15,000 and invest $5,000\$5,000 in modifications. Sell the trailer later for $16,000\$16,000.20%20\% net loss
  • Purchase 2020 antique desks for $30\$30 each, spend $200\$200 on restoration supplies, then sell 1010 for $100\$100 each and 1010 for $20\$20 each.50%50\% net profit

Answer

Motorcycle scenario matches 20%20\% net profit, jacket scenario matches 25%25\% net profit, trailer scenario matches 20%20\% net loss, and antique desk scenario matches 50%50\% net profit.
Each scenario requires calculating total cost, total revenue, and the net difference. Then, dividing that difference by the total cost yields the correct profit or loss percentage.

Step-by-Step Solution

1
Calculate the total cost for each scenario by adding the purchase price and any overhead or repair expenses.
Motorcycle cost = $2,500\$2,500; Jackets cost = $1,600\$1,600; Trailer cost = $20,000\$20,000; Desks cost = $800\$800.
Profit and loss are always calculated based on the total initial investment, not just the base price.
2
Calculate the total revenue for each scenario based on the items successfully sold.
Motorcycle revenue = $3,000\$3,000; Jackets revenue = $2,000\$2,000; Trailer revenue = $16,000\$16,000; Desks revenue = $1,200\$1,200.
Revenue must account for varied selling prices and discarded inventory.
3
Determine the dollar amount of profit or loss by subtracting the total cost from the revenue.
Motorcycle = +$500+\$500; Jackets = +$400+\$400; Trailer = −$4,000-\$4,000; Desks = +$400+\$400.
A positive value indicates a net profit, while a negative value indicates a net loss.
4
Calculate the percentage profit or loss by dividing the profit/loss by the total cost, then multiplying by 100%100\%.
Motorcycle = 20%20\% profit; Jackets = 25%25\% profit; Trailer = 20%20\% loss; Desks = 50%50\% profit.
This standardizes the dollar amounts into percentages to match the available options.

Key Concept

Calculating profit or loss percentages requires finding the total cost (including overhead) and total revenue, then dividing the net difference by the total cost.
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Topics

Profit and Loss

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