Kevin and Sarah’s friend Ally wants in on the entrepreneurial action and decides to sell her world famous Mega-Death Choco Cookies at fairs and church carnivals. She has learned the following calculations for gross margins:
Gross margin (as a percent) = (Selling price – costs) / Selling price
Gross profit in dollars = selling price – costs
At the county fair she had the following results:
Price for a dozen cookies = $12
Costs for ingredients = $3
Booth and table cloth = $150
Other fixed expenses = $200
In two days, she sold 214 dozen cookies (these are really good cookies)
What is Ally’s gross margin for a dozen cookies?
1) 70%
2) 68%
3) 75%
4) 50%
5) She needs more information to know