A customer buys two items for $120 each. If the first item has a profit margin o
Practice Questions
Q1
A customer buys two items for $120 each. If the first item has a profit margin of 25% and the second has a loss of 25%, what is the overall profit or loss?
$0
$10 profit
$10 loss
$20 profit
Questions & Step-by-Step Solutions
A customer buys two items for $120 each. If the first item has a profit margin of 25% and the second has a loss of 25%, what is the overall profit or loss?
Step 1: Identify the selling price of each item. Both items are sold for $120 each.
Step 2: Calculate the cost price of the first item. Since it has a profit margin of 25%, use the formula: Cost Price = Selling Price / (1 + Profit Margin). So, Cost Price of first item = 120 / 1.25 = $96.
Step 3: Calculate the cost price of the second item. Since it has a loss of 25%, use the formula: Cost Price = Selling Price / (1 - Loss Margin). So, Cost Price of second item = 120 / 0.75 = $160.
Step 4: Add the cost prices of both items to find the total cost price. Total Cost Price = 96 + 160 = $256.
Step 5: Calculate the total selling price. Since both items are sold for $120 each, Total Selling Price = 120 + 120 = $240.
Step 6: Determine the overall profit or loss by subtracting the total selling price from the total cost price. Loss = Total Cost Price - Total Selling Price = 256 - 240 = $16.
Profit Margin Calculation – Understanding how to calculate cost price from selling price using profit and loss percentages.
Total Cost and Selling Price – Calculating the total cost price and total selling price to determine overall profit or loss.
Profit and Loss Analysis – Analyzing the difference between total cost and total selling price to find profit or loss.
