A hardware store bought a gross (12 dozen) of hammers, paying $602.40 for the to

Question

A hardware store bought a gross (12 dozen) of hammers, paying $602.40 for the total order. The retailer estimated operating expenses for this product to be 35% of sales, and wanted a net profit of 5% of sales. The retailer expected no markdowns. What retail selling price should be set for each hammer? [Hint: The way to handle this problem is to say that the Gross Profit Margin has to cover the 35% of expenses applicable to the product plus the 5% of net profit wanted. And once you know the GPM%, you know the Cost percentage of the Selling Price. ]

Show work (calculations), no excel.

Explanation / Answer

Cost price(CP) of 12 dozen of hammers = 602.40 $

Estimated expenses = 35% of selling price(SP)

Profit wanted= 5%of SP

Let SP of 12 dozen of hammers = x

Now,

CP of 12 dozens of hammers+ estimated expenses + profit wanted= SP of 12 dozen of hammers

602.4 + .35 x + .05x = x

602.4 = .6x

X= 6024/6=1004

SP of 12 dozen of hammer = 1004

SP of each hammer = 1004/12*12 = 7$(approx)

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