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Cost and profit

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Intern
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Joined: 17 May 2011
Posts: 8
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Cost and profit [#permalink] New post 19 May 2011, 19:49
00:00
A
B
C
D
E

Difficulty:

  45% (medium)

Question Stats:

63% (02:59) correct 38% (01:30) wrong based on 8 sessions
A whole-seller allows a discount of 20% on the list price to a retailer. The retailer sells at 5% discount on the list price. If the customer paid $38 for an article, what profit is made by the retailer ?
a. $10
b. $8
c. $6
d. $12

How to do this ?
[Reveal] Spoiler: OA
Director
Director
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Status: Matriculating
Affiliations: Chicago Booth Class of 2015
Joined: 03 Feb 2011
Posts: 925
Followers: 13

Kudos [?]: 245 [0], given: 123

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Re: Cost and profit [#permalink] New post 19 May 2011, 20:01
Let the list price be x

Cp to retailer = 0.8 x
Sp retailer = 0.95 x

Profit = 0.15 x

We know that customer paid $38. hence 0.95x = 38 and x = 40

Profit = 0.15 * 40 = $6

ramkryp wrote:
A whole-seller allows a discount of 20% on the list price to a retailer. The retailer sells at 5% discount on the list price. If the customer paid $38 for an article, what profit is made by the retailer ?
a. $10
b. $8
c. $6
d. $12

How to do this ?
Intern
Intern
avatar
Joined: 17 May 2011
Posts: 8
Followers: 0

Kudos [?]: 4 [0], given: 1

Re: Cost and profit [#permalink] New post 19 May 2011, 20:17
Thanks :)
VP
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Status: There is always something new !!
Affiliations: PMI,QAI Global,eXampleCG
Joined: 08 May 2009
Posts: 1356
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Kudos [?]: 177 [0], given: 10

Re: Cost and profit [#permalink] New post 19 May 2011, 20:18
retailer's SP = 0.95 LP = 38
LP = 40

retailer's CP = 0.8 LP = discounted price from the whole sailer = 32

Profit = 0.95 LP - 0.8 LP = 38 - 32 = 6
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Director
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Joined: 01 Feb 2011
Posts: 759
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Kudos [?]: 75 [0], given: 42

Re: Cost and profit [#permalink] New post 21 May 2011, 13:32
whole sale person's selling price = retailers cost price = (80/100)(LP)

retailers selling price = (95/100)LP

=> profit = (15/100)*LP equation1

also given that (95/100)LP = 38 eqution2

substituting 2 in 1 we have
profit = 6
Intern
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Re: Cost and profit [#permalink] New post 24 May 2011, 08:34
The customer pays $95 when the list price is $ 100

Therefore the list price of the article when the customer pays $ 38 = 100 * 38/95 = $ 40

The retailer got it from the wholesaler after 20% discount

So the cost price of the article to the retailer = 0.8 * 40 = $ 32

Hence profit = SP - CP = $6
Manager
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Status: Completed GMAT on 22 Nov 2011
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Posts: 167
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Kudos [?]: 52 [0], given: 12

Re: Cost and profit [#permalink] New post 25 May 2011, 06:07
Step 1:

Let the list price be x

So, the retailer sells the product @ 5% discount on the list price
The selling price is 38

=> 0.95x = 38
=> x=38/0.95=40


Step 2:

But the wholesaler sells the product to the retailer @ 20% discount on the list price
So the cost price to the retailer is:

0.8*40=32


Step 3:
So, the profit to the retailer is SP-CP = 38-32 = 6

Option (C) is the right answer.
Re: Cost and profit   [#permalink] 25 May 2011, 06:07
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