Question

Sabrina's Naturals is a new start-up company that is trying to get their line of natural hair products listed in stores. They have several products including shampoos, conditioners, and styling products. Their most popular item is a natural hair spray, which they think most retailers will list. For one bottle of hair spray, it costs Sabrina's Naturals $3.50. Sabrina's Naturals then sells the bottle to the retailer for $5.50. The retailer prices the item at $8.50 to the end customer. What is the percentage margin for Sabrina's Naturals (to the closest whole percent)?

A.36%
B.57%
C.55%
D.86%
​

Answer 1

The percentage margin for Sabrina's Naturals on their natural hair spray is calculated by dividing the profit margin in dollars by the cost and multiplying by 100. With a cost of $3.50 and a selling price of $5.50, the percentage margin is approximately 57%.

Step-by-step explanation:

To calculate the percentage margin for Sabrina's Naturals on their natural hair spray, we need to consider the cost of the product to Sabrina's Naturals and the price at which they sell the product to retailers. The difference between the selling price and the cost is the profit margin in dollars. To find the percentage margin, we divide the profit margin in dollars by the cost to Sabrina's Naturals and multiply by 100 to convert it to a percentage.

The formula for percentage margin is:

Percentage Margin = (Selling Price - Cost) / Cost × 100%

For Sabrina's Naturals:

Selling Price to Retailers = $5.50

Cost to Sabrina's Naturals = $3.50

Thus:

Profit Margin in Dollars = $5.50 - $3.50 = $2.00
Percentage Margin = ($2.00 / $3.50) × 100% ≈ 57%

Therefore, the percentage margin for Sabrina's Naturals is approximately 57%, which corresponds to option B.