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Selling Price In order to make money by selling a product, you need to sell it for more than it costs. How do you determine how much to charge for a product?

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Lesson Objective Find the net profit as a percent of the selling price. Content Vocabulary net-profit rate The net profit on an item expressed as a percent of the selling price.

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Giant Discounts sells a vacuum cleaner for $49.99. The cost of the vacuum cleaner to Giant Discounts is $23.74. Giant estimates the overhead expenses on the vacuum to be 30 percent of the selling price. What is the net-profit rate based on the selling price of the vacuum cleaner? Example 1

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Find the net profit. Markup – Overhead ($49.99 – $23.74) – ($49.99 × 30%) $26.25 – $15.00 = $11.25 Example 1 Answer: Step 1

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Find the net-profit rate. Net Profit ÷ Selling Price $11.25 ÷ $49.99 = 0.2250 or 22.5% Example 1 Answer: Step 2

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A doll costs the Toy Store $7.85. The doll has a selling price of $16.96. The store estimates overhead at 28 percent of the selling price. Find the net-profit rate based on the selling price. Example 2

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Find the net profit. Markup – Overhead ($16.96 – $7.85) – ($16.96 × 28%) $9.11 – $4.75 = $4.36 Example 2 Answer: Step 1

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Find the net-profit rate. Net Profit ÷ Selling Price $4.36 ÷ $16.96 = 0.2570 or 25.7% Example 2 Answer: Step 2

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Find the markup, overhead, net profit, and net-profit rate. Selling price: $41.25 Cost: $23.25 Overhead expense: 25 percent of selling price Practice 1

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Markup: $18 Overhead: $10.31 Net profit: $7.69 Net-profit rate: 19% Practice 1 Answer

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Find the markup, overhead, net profit, and net-profit rate. Selling price: $459.45 Cost: $205.35 Overhead expense: 45 percent of selling price Practice 2

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Markup: $254.10 Overhead: $206.75 Net profit: $47.35 Net-profit rate: 10% Practice 2 Answer

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