GMATClub test m07 q

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GMATClub test m07 q [#permalink]

04 Jan 2010, 07:38

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Question Stats:

75% (03:06) correct

25% (00:00) wrong

based on 0 sessions

A car has been sold by a dealership for a profit of 25%. If the dealership bought it from a manufacturer that in turn made a profit of 12.5%, what was the end price to the consumer if the cost to manufacture the car was $12,000?

A. 12,750
B. 13,750
C. 15,500
D. 16,150
E. 16,875

OA:
The car cost $12,000 to manufacture and the profit margin of the manufacturer was 12.5% or $1,500. Therefore, the dealer paid $13,500. If the dealer made 25% profit or $3,375, the end price to consumer was $16,875.

The problem is that profit margin for manufacturer is
\frac{Profit}{Sales}=\frac{1,500}{13,500}=11,(1)%. The same problem is for dealership's.

For current explanation the term "mark-up" should be used in question.
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Re: GMATClub test m07 q [#permalink]

06 Jan 2010, 01:46

IMO that's a valid remark, profit margins have Sales value in denominator, they measure profit/sales relation

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Re: GMATClub test m07 q [#permalink]

27 Feb 2012, 09:52

12000*\frac{9}{8}*\frac{5}{4} = 375*45

you don't really need to calculate 375*45, as the only answer choice that has 5 in the units place is e (16,875).

ans: e
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Re: GMATClub test m07 q [#permalink] 27 Feb 2012, 09:52

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