The Sports Shoppe is buying baseball t-shirts. The cost of the shirts, which includes permission fees, will be $11.44 each if 1000 shirts are purchased. Jamie sells 800 shirts before the baseball season begins at a 50% markup based on cost. What is the gross margin (markup) if Jamie sells the remaining 200 shirts at a 25% reduction from the selling price?

Question

Quizplus · Accepted Answer

First, we can calculate the cost of each shirt:

$11.44/shirt x 1000 shirts = $11,440

Since Jamie sells the first 800 shirts at a 50% markup, the selling price per shirt will be 1.5 times the cost:

$11.44 x 1.5 = $17.16

The gross margin (markup) on these 800 shirts is then:

$17.16 - $11.44 = $5.72/shirt 
$5.72/shirt x 800 shirts = $4,576

For the remaining 200 shirts, Jamie sells at a 25% reduction from the selling price:

$17.16 x 0.75 = $12.87

The gross margin (markup) on these 200 shirts is then:

$12.87 - $11.44 = $1.43/shirt 
$1.43/shirt x 200 shirts = $286

Total gross margin (markup) is:

$4,576 + $286 = $4,862

Therefore, the answer is D: $4862.

The Sports Shoppe Is Buying Baseball T-Shirts