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Homework answers / question archive / Hector decided to enter the mask business

Hector decided to enter the mask business

Finance

Hector decided to enter the mask business. He purchased 5,000 masks online from an Italian manufacturer. These are fashion-forward masks for which Hector paid €4 each (current Euro/Dollar exchange rate is $1.21 per Euro). Hector decided to mark-up the product 25%. He succeeded in selling out his inventory.

• What, in US$, was Hector’s gross profit?

• What was the gross profit margin percentage?

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[1] Hectors's Gross profit      
  1euro=1.21          
             
  Cost of purchase the one mask in $= 4$*1.21  
        = $4.84  
             
  Total cost of 5000 mask   = 24200  
          (5000*4.84)
             
  Selling price of 5000 mask = 24200+25%
        = 30250  
             
  Gross profit   = 30250-24200    
             
      = 6050    
             
             
[2] Gross profit margin percentage    
             
             
             
  GP margin = Selling price- cost price *100  
      selling price    
             
    = 6050 *100    
      30250      
             
    = 20%

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