If the wholesale price of a sand wedge is $105, the retail price is $175, and the final sales price is $125, what is the gross margin percentage?

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Multiple Choice

If the wholesale price of a sand wedge is $105, the retail price is $175, and the final sales price is $125, what is the gross margin percentage?

Explanation:
Gross margin percentage measures how much profit a retailer keeps from each dollar of sales after accounting for the cost of the goods sold. It’s calculated as gross profit divided by net sales. Here, gross profit = final selling price minus cost: 125 − 105 = 20. Net sales is the final selling price, 125. So gross margin = 20 / 125 = 0.16, which is 16%. The retail price of 175 isn’t used in this calculation because margin is based on what customers actually pay (the final sales price), not the original sticker price.

Gross margin percentage measures how much profit a retailer keeps from each dollar of sales after accounting for the cost of the goods sold. It’s calculated as gross profit divided by net sales. Here, gross profit = final selling price minus cost: 125 − 105 = 20. Net sales is the final selling price, 125. So gross margin = 20 / 125 = 0.16, which is 16%. The retail price of 175 isn’t used in this calculation because margin is based on what customers actually pay (the final sales price), not the original sticker price.

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