A retailer can purchase a national brand of canned corn for $.39.The canned corn sells for $.52.Total direct retailing costs for the corn (warehouse costs and direct labor)equal $.03 per can.In addition,$.05 per can is charged for administrative overhead.What is the direct product profitability per can?

Question

Quizplus · Accepted Answer

Direct product profitability is calculated by subtracting the cost of goods sold and all associated costs from the selling price. Here, the selling price is $.52, the purchase cost is $.39, direct retailing costs are $.03, and administrative overhead is $.05. So, the profitability is $.52 - ($.39 + $.03 + $.05) = $.05.

A Retailer Can Purchase a National Brand of Canned Corn