PGA Level 2 Merchandising/Inventory Practice Exam

To determine the potential gross margin percentage of the golf shirt, it's important to first understand the concepts of retail price and markup.

The retail price of the golf shirt is $50, and the markup is $25. Markup refers to the amount added to the cost of a product to determine its selling price. In this case, the cost of the shirt can be calculated by subtracting the markup from the retail price.

Calculating the cost of the shirt:

Cost = Retail Price - Markup

Cost = $50 - $25 = $25

Gross margin is defined as the difference between the retail price and the cost of the product, expressed as a percentage of the retail price. To find the gross margin percentage, you can use the following formula:

Gross Margin Percentage = (Retail Price - Cost) / Retail Price × 100

Substituting the values:

Gross Margin Percentage = ($50 - $25) / $50 × 100

Gross Margin Percentage = $25 / $50 × 100

Gross Margin Percentage = 0.5 × 100 = 50%

Therefore, the potential gross margin percentage for the golf shirt is 50%. This means that half of the retail price is retained as profit after accounting for