SOLUTION: A store owner average day sales of $500, realizing a profit of 20% of the selling price. To increase the volume of his sale, he advertised his goods spending an average of $20 a da
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Question 1122215: A store owner average day sales of $500, realizing a profit of 20% of the selling price. To increase the volume of his sale, he advertised his goods spending an average of $20 a day for advertising. If his average daily sales rose to $700 and the rate or profit remained the same, how much additional profit did the advertising bring?
Thank you for your help!
Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
he makes 500 a day with a profit of 20% of 500 = 100 a day.
he pays an additional 20 dollars a day in advertising and makes 700 a day with profit still at 20% of sales = 20% of 700 = 140 a day.
assuming that the cost of advetising is separate from the percent profit of sales, then this is what i get.
before the advertising he was making a profit of 100 a day.
after the advertising he was making a profit of 140 a day.
subtract 20 from the profit from 700 a day because of the additional cost of advertising and he was making a net profit of 120 a day.
the advertising brought an additional profit of 20 dollars a day under the assumption that the additional cost for advertising was not included in the profit percent of sales calculation.
if you assume the additional cost of advertising was covered under the 20% profit of sales, then you'll get a different answer.
20% of 500 = 100
20% of 700 = 140
the additional profit would be 40 a day, assuming the additional cost of 20 a day for advertising was covered in the 20% profit based on sales.
the problem did not state whether the additional 20 dollars a day for advertising was covered in the 205, so it's difficult to see what the correct answer needs to be.
i'd go with the 40 a day under the simplistic assumption that the additional cost of advertising was covered in the 20%, but keep in mind that, if that answer is wrong, then 20 a day might be the correct answer.
the alternative is to ask your instructor if the 20 dollars a day additional cost for advertising is included in the 20%.
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