Profit Margins The following chart shows retail stores’ average percent profit margin on certain items.
Product Category | Average Profit Margin (%) |
Video equipment | 12 |
Audio components | 14 |
Stereo speakers | 20 − 25 |
Extended warranties | 50 − 60 |
Source: Consumer Reports
a) Determine the average profit of a store that has the list price of $620 on a camcorder.
b) Determine the average profit of a store that has a list price of $1200 on a pair of speakers (use a 22% profit margin).
c) If you negotiate and get the salesperson to sell the speakers for $1000, find the store’s profit (use a 22% profit margin).
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