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Senior Manager
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A store sold A at a price three times as much as B. The [#permalink]
 30 Jun 2004, 18:02
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A store sold A at a price three times as much as B. The gross profit of A is 80% of the price that the store paid for A. The gross profit for B is 20% of the price that the store paid for B. what percent is the total gross profit of the total amount that the store paid for both A and B?
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GMAT Club Legend
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A = 3B
Total cost: B + 3B = 4B
gross profit: .8*3B + .2*B
gross profit/total cost = [.8*3B + .2*B] / 4B
= 2.4B + .2B / 4B
= 2.6B / 4B = .65
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Best Regards,
Paul
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Senior Manager
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I got a slightly different answer:
A B
Sale 100 20
CGS 50 20
GP 40 4
GP/CGS = 44/70 = 22/35= 62.8%
Any thoughts?
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Senior Manager
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it seems like there's a flaw in my solution, I just can't quite put my finger on it.
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Senior Manager
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I've got 65% too, so I wanted just to check with you guys 
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Senior Manager
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Paul wrote: A = 3B
Total cost: B + 3B = 4B
gross profit: .8*3B + .2*B
gross profit/total cost = [.8*3B + .2*B] / 4B
= 2.4B + .2B / 4B
= 2.6B / 4B = .65
I think the selling price(SP) of A is 3 times of B ( and not the cost price)
So the gross profit should be calculated on Cost price(CP).
Let SP of B = 100.
SP of A = 300
CP of A = 300/1.8
CP of B = 100/1.2
total cost = 300/1.8 + 100/1.2
Total gross profit = (300 - 300/1.8) + (100 - 100/1.2 )
% profit = (total gross profit / total cost )*100= 60%
- ash.
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ash
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I'm crossing the bridge.........
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GMAT Club Legend
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ashk, your answer intrigues me.
Quote: CP of A = 300/1.8
CP of B = 100/1.2
Can you explain how you derived this? Also, are you not taking data from gross profit (profit/cost) and applied it to sales price?
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Best Regards,
Paul
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Senior Manager
Joined: 21 Mar 2004
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If CP is x and profit is 80% on CP , profit = .8x
the SP would be x+.8x = 1.8x
So CP in terms of SP = SP/1.8 = 300/1.8
Similary
for B , CP = 100/1.2
as profit is 20%.
hope that clears things.
- ash
_________________
ash
________________________
I'm crossing the bridge.........
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GMAT Club Legend
Joined: 15 Dec 2003
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lastochka wrote: I got a slightly different answer:
A B
Sale 100 20
CGS 50 20
GP 40 4
GP/CGS = 44/70 = 22/35= 62.8%
Any thoughts? Hmmm, given that B sales price is 20, shouldn't sales price of A be 60$? Quote: A store sold A at a price three times as much as B
Also, how did you get CGS(cost of goods sold) 50$ for A and 20$ for B? Am I missing something here?
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Best Regards,
Paul
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GMAT Club Legend
Joined: 15 Dec 2003
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ashkg wrote: If CP is x and profit is 80% on CP , profit = .8x
the SP would be x+.8x = 1.8x
So CP in terms of SP = SP/1.8 = 300/1.8
Similary
for B , CP = 100/1.2
as profit is 20%.
hope that clears things.
- ash
:nice ashk. Are you an accountant? Well, after your explanation, I declare myself birdbrain 
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Best Regards,
Paul
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Senior Manager
Joined: 21 Mar 2004
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Hi Paul,
You have prompted me to post an introduction of myself 
Thanks for that, or I would have done that after my exam.
Here is the link.
http://www.gmatclub.com/phpbb/viewtopic ... 2114#42114
take care,
ash.
_________________
ash
________________________
I'm crossing the bridge.........
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