[Guest]

So BD Inc., hired a consultant so they can start selling shirts. The consultant tells them the following;

The shirts cost $10.00

My comission off each shirt is 5%.

I assume you want some commission, so we will give you 10%.

So, 15% total profit on a $10.00 will increase it by $1.50 bringing our total to $11.50.

There is no taxes for sales over the internet.

After you BD Inc., sold 100 Shirts they checked their statements.

Assuming the consultant always gets his 5%,

What should BD Inc. expect to see, as in who got what money. (How much do the shirts cost? How much did the consultant expect to be paid? How much did BD Inc. expect to make?)

Is what BD Inc. make and what they expect to make diffrent?

If they see something different, where was the error in calculation?

Salesman, consultants, etc. always get paid off the final sales price.

Edited April 11, 2008 by PolishNorbi

[Brandonb]

The answer you are looking for is:

The expected #'s were BD=$100 and cons=$50

However, the projected exclusive profits were added inclusively in the given statement ($10 now costs $11.50)

So they end up with BD=$115 and cons=57.50

Meaning that there is a shortage of $22.5 on the money for the T-shirts.

Moral of the story, never add exclusive % to the number that it was already included in.

In order to do this, the price should have been about 1176.47

[Guest]

The answer you are looking for is:

The expected #'s were BD=$100 and cons=$50

However, the projected exclusive profits were added inclusively in the given statement ($10 now costs $11.50)

So they end up with BD=$115 and cons=57.50

Meaning that there is a shortage of $22.5 on the money for the T-shirts.

Moral of the story, never add exclusive % to the number that it was already included in.

In order to do this, the price should have been about 1176.47

You my friend are correct, however I got confused by your answer.

The way I explained would it explain it;

For $1,150 they have.

$1,000 goes to shirts.

$57.50 goes to the Consultant.

Leaving: $92.50, not the $115 they were expecting.

The reason behind this is they calculated off the cost when the percentage are paid off the final price.

To calculate properly it would be $10 / (1-.15) = $11.7647 per shirt and not the $10 * 1.15 (To have a 15% profit)

Edited April 11, 2008 by PolishNorbi