Question

Activity A Question Description A small superette bakes rye bread and sells it for R12 per loaf. It costs the company R7 per loaf to produce the bread, and the company has to add an additional R1.20 in tax. Determine the superette's profit margin on the rye bread: correct it to one decimal place Mark​

Answer 1

To determine the superette's profit margin on the rye bread, we need to calculate the profit made per loaf.

The selling price of the bread is R12 per loaf.
The total cost to produce one loaf is the cost price of R7 plus the tax of R1.20, which equals R8.20.

Therefore, the profit made per loaf is:
Profit = Selling Price - Cost Price
Profit = R12 - R8.20
Profit = R3.80

Now, to calculate the profit margin, we use the formula:
Profit Margin = (Profit / Cost Price) x 100

Profit Margin = (3.80 / 8.20) x 100
Profit Margin = 0.4634 x 100
Profit Margin = 46.34%

Therefore, the superette's profit margin on the rye bread is 46.3% when rounded to one decimal place.