First calculate the amount of overhead expenses. The selling price was $240. To find 20% of 240, multiply 240 by 0.20, which equals 48. From that, we found that the overhead expenses were $48.
To find the rate of profit, take the selling price and subtract all expenses. We know that Mr Lippman's selling price was $240, he spent $160 to buy the dryer, and he had $48 worth of overhead expenses. 240 - 160 - 48 = 32.
Therefore, the profit was $32.
To find the rate of profit, divide the profit by the total expenses. 32 / (240 + 160) = 0.08.
Therefore, the rate of profit was 8%.
