Dani's denim sells blue jeans. in 2017, dani's specialized in selling moderately priced jeans with a 25% markup. in 2018, dani's management decided to sell more expensive designer jeans with a markup of 30% and eliminate the moderately priced options. if dani's denim has the same annual net sales in both years, how will dani's gross profit rate in 2018 differ from its gross profit rate in 2017?

Question

Copper

Business

12 October, 10:49

Dani's denim sells blue jeans. in 2017, dani's specialized in selling moderately priced jeans with a 25% markup. in 2018, dani's management decided to sell more expensive designer jeans with a markup of 30% and eliminate the moderately priced options. if dani's denim has the same annual net sales in both years, how will dani's gross profit rate in 2018 differ from its gross profit rate in 2017?

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Answers (2)

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Sebastian Warren · Answer 1

The markup percentage tells you how much money a business makes off each sale. If Dani is selling products with a higher mark up, this means she makes more money off each dollar of sales. In this case, you would expect Dani's profit margins to increase due to the increased markup percentage.

Reagan Lawson · Answer 2

If Dani's denim sells his jeans at a 30% markup his gross profit would grow by 20%

Explanation:

All right here we go. the markup is the amount of money a seller or producer ads to his or her product to achieve a net profit figure. In our case Dani's denim markup over the price of the good was an initial 25%, then they decided to increase the markup by 20% its original price. So, at least his gross profit is going to grow by 20%. You just need to make a calculation of the difference between the initial number, the second and how it changed.