Question

You estimate a selling price of about $335 for the Carnaby Street mini-dress and $285 for the rock star ensemble. Profit for the mini-dress is 43 percent and 36 percent for the ensemble.To decide between these two choices, what would be the most useful thing to calculate?

Answer 1

Answer:

Number of each dress that can be sold.

Explanation:

Here, selling price and profit margin of both products, mini dress and ensemble are given. At the outset, it may seem that mini- dress is a profitable venture than ensemble as it is sold a higher price and profit margin. However, suppose 100 units of mini dress could be sold earning a profit of $14,405 (335×100×0.43).

If 200 units of ensemble could be sold, it would earn the seller a profit of $20,520 (285×200×0.36).

So in order to make a decision, the seller should estimate the number of each of the product to be sold such that profit earned from each product is equal.