If we have fixed costs of $50,000 on a product and want to have a profit margin of 25%, how much should we charge the customer to buy it?

• 62500...............
• 10 years agoHelpfull: Yes(4) No(0)
• Suppose we knew the
  price we're going to charge; I'll call it X. Then the margin would be
  25% of that, or 0.25 times X. The cost would be that much less than X:
  
  cost = X - 0.25X
  
  But 1 times X, minus 0.25 times X, is 0.75 times X. That is, 100% -
  25% is 75%. So
  
  cost = 0.75X
  
  But now we can find X, because we know the cost is $50,000!
  
  50,000 = 0.75X
  
  X = 50,000 / 0.75
  
  That is, we undo the multiplication by 0.75, by dividing 50,000 by
  0.75. So
  
  X = $66,666.67
• 12 years agoHelpfull: Yes(3) No(2)