Marshalls Retailing now carries the Fabletics yoga pants line of athletic wear. Marshalls needs to ensure that the new line contributes no less to their profit than other clothing lines it carries. The Fabletics line needs to provide a 48.5% gross profit margin percentage. Marshalls buys the Fabletics yoga pants at a cost of $12 per pair. At what price should Marshalls sell the Fabletics Yoga pants?

Question

Quizplus · Accepted Answer

To ensure a gross profit margin of 48.5%, the selling price needs to be calculated as follows:

Selling Price = (Cost / (1 - Gross Profit Margin Percentage))
Selling Price = ($12 / (1 - 0.485))
Selling Price = ($12 / 0.515)
Selling Price = $23.30

Therefore, Marshalls should sell the Fabletics Yoga pants at $23.30 to maintain a gross profit margin of 48.5%. Option B is the correct answer.

Marshalls Retailing Now Carries the Fabletics Yoga Pants Line of Athletic