If an item is sold for $2,000 with a profit margin of 25% based on the cost price, what is the cost price of the goods sold?

Explanation

Given the selling price is $2,000 and the profit is 25% of the cost price, let the cost price be 'C'. Then, selling price = cost price + 25% of cost price = 1.25 × C = 2,000. Solving for C gives C = 2,000 ÷ 1.25 = $1,500. Therefore, the cost of goods sold is $1,500.