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m07 q33

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m07 q33 [#permalink] New post 08 Sep 2008, 10:39
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A shop purchased a pair of sunglasses for $120 and was selling it at a price that equaled the purchase price of the sunglasses plus a markup that was 25 percent of the selling price. After some time a shop owner decided to decrease the selling price by 20 percent. What was the shop's gross profit on this sale?

A. $0
B. $2
C. $4
D. $6
E. $8

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Re: m07 q33 [#permalink] New post 23 Nov 2012, 05:21
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mbafwi wrote:
If a company sells S tons (1 ton = 1000 kilograms) of product A annually and charges B dollars per ton, what is the profit if it costs G dollars to manufacture a kilogram of product A and P dollars to ship it to the customer?

(A) b-1000g+1000p
(B) bs-\frac{g+p}{1000}
(C) (b-(g+p))*s
(D) \left(\frac{g}{1000}-(b+p)\right)*s
(E) \left(\frac{b}{1000}-(g+p)\right)*1000s

[Reveal] Spoiler: OA
E

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My Question: I believe this solution is wrong. The final answer has units of $/kg inside the parenthesis, multiplied by S which is in tons. If somebody sees something I don't, let me know. Also, the explanation is confusing since they say use $5/kg as B, but then divide B by 1000 in the final equation (which converts /ton to /kg). Another thing is the question doesn't say if the shipping cost is per ton or per kg. Overall, this is a confusing question, confusing enough to have a wrong answer, so should probably be thrown away or reworded.


This question was replaced by the following one:

A shop purchased a pair of sunglasses for $120 and was selling it at a price that equaled the purchase price of the sunglasses plus a markup that was 25 percent of the selling price. After some time a shop owner decided to decrease the selling price by 20 percent. What was the shop's gross profit on this sale?

A. $0
B. $2
C. $4
D. $6
E. $8

Let the markup be $x, so x must be 25% of the selling price, which would be 120+x: x=0.25(120+x) --> x=40. Hence the selling price was 120+40=160.

The price after the discount of 20% would be 160*0.8=128 --> gross profit on the sale: final selling price - cost of the sunglasses = $128 - $120 = $8.

Answer: E.
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Re: m07 q33 [#permalink] New post 19 Nov 2013, 05:44
Can you explain why it's not 1.25*120=150? I am confused on how you got to 160 from 120 if the markup is 25%.

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Re: m07 q33 [#permalink] New post 19 Nov 2013, 05:48
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cf1988 wrote:
Can you explain why it's not 1.25*120=150? I am confused on how you got to 160 from 120 if the markup is 25%.

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The stem says a markup was 25 percent of the selling price not of the purchase price ($120).
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Re: m07 q33 [#permalink] New post 19 Nov 2013, 11:26
A shop purchased a pair of sunglasses for $120 and was selling it at a price that equaled the purchase price of the sunglasses plus a markup that was 25 percent of the selling price. After some time a shop owner decided to decrease the selling price by 20 percent. What was the shop's gross profit on this sale?

I did it slightly different than Bunuel but the concept is the same.

Let x = selling price

x = 120 + .25(x)
.75x = 120
x = $160 = selling price

.80 x $160 = 128 = discounted selling price

128 - 120 = $8
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Re: m07 q33 [#permalink] New post 19 Nov 2013, 13:16
Purchase Price+ 0.25*Selling Price= Selling Price
Selling Price = 120/.75 = 160
New Selling Price after 20% decrease= 120*.8=128
Profit: New Selling Price-Purchase Price: 120-120= 8

Answer (E)
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Re: m07 q33 [#permalink] New post 20 Nov 2013, 08:52
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One of my duties at work is to set prices for retailers, so this may help some people:

When including a markup for the retailer, you want the markup INCLUDED in the price. Your goal thus becomes "what does my price need to be so that 25% of the final price will be profit?

The general formula: Retail Price = Purchase Price / 1-Desired Markup



For example:

If Bob bough a pair of pants for $100 and wanted to make 25% on his investment, he would simply multiply 100*1.25 for a figure of $125. Bob makes $25. However, the % of the sale which Bob puts in his pocket is $25/$125=20%

If Bob bought a pair of pants for $100, and wanted 25% of the the SALE price to go into his pocket, he would divide the desired percentage into the price, therefore $100/(1-0.25) = $100/0.75 = $133.33. Notice that Bob is now making $33.33. $33.33/$133.33 = 25% Therefore, 25% of the sale price was profit for Bob.


I hope this helps.
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Re: m07 q33 [#permalink] New post 28 Nov 2013, 01:36
Can anyone provide the solution for the first question. I am not able to solve it.
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Re: m07 q33 [#permalink] New post 28 Nov 2013, 01:59
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Re: m07 q33 [#permalink] New post 28 Nov 2013, 17:33
While I understand Bunuel's explanation, isn't the question a little ambiguous when it says decrease the SP by 20%- I mean it hasn't clarified whether its talking about the SP inclusive of Mark Up or the original SP?





mbafwi wrote:
A shop purchased a pair of sunglasses for $120 and was selling it at a price that equaled the purchase price of the sunglasses plus a markup that was 25 percent of the selling price. After some time a shop owner decided to decrease the selling price by 20 percent. What was the shop's gross profit on this sale?

A. $0
B. $2
C. $4
D. $6
E. $8

Source: GMAT Club Tests - hardest GMAT questions
Expert Post
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User avatar
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Posts: 23398
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Re: m07 q33 [#permalink] New post 29 Nov 2013, 01:35
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Shibs wrote:
While I understand Bunuel's explanation, isn't the question a little ambiguous when it says decrease the SP by 20%- I mean it hasn't clarified whether its talking about the SP inclusive of Mark Up or the original SP?





mbafwi wrote:
A shop purchased a pair of sunglasses for $120 and was selling it at a price that equaled the purchase price of the sunglasses plus a markup that was 25 percent of the selling price. After some time a shop owner decided to decrease the selling price by 20 percent. What was the shop's gross profit on this sale?

A. $0
B. $2
C. $4
D. $6
E. $8

Source: GMAT Club Tests - hardest GMAT questions


The mark up is included in selling price.
_________________

NEW TO MATH FORUM? PLEASE READ THIS: ALL YOU NEED FOR QUANT!!!

PLEASE READ AND FOLLOW: 11 Rules for Posting!!!

RESOURCES: [GMAT MATH BOOK]; 1. Triangles; 2. Polygons; 3. Coordinate Geometry; 4. Factorials; 5. Circles; 6. Number Theory; 7. Remainders; 8. Overlapping Sets; 9. PDF of Math Book; 10. Remainders; 11. GMAT Prep Software Analysis NEW!!!; 12. SEVEN SAMURAI OF 2012 (BEST DISCUSSIONS) NEW!!!; 12. Tricky questions from previous years. NEW!!!;

COLLECTION OF QUESTIONS:
PS: 1. Tough and Tricky questions; 2. Hard questions; 3. Hard questions part 2; 4. Standard deviation; 5. Tough Problem Solving Questions With Solutions; 6. Probability and Combinations Questions With Solutions; 7 Tough and tricky exponents and roots questions; 8 12 Easy Pieces (or not?); 9 Bakers' Dozen; 10 Algebra set. ,11 Mixed Questions, 12 Fresh Meat

DS: 1. DS tough questions; 2. DS tough questions part 2; 3. DS tough questions part 3; 4. DS Standard deviation; 5. Inequalities; 6. 700+ GMAT Data Sufficiency Questions With Explanations; 7 Tough and tricky exponents and roots questions; 8 The Discreet Charm of the DS ; 9 Devil's Dozen!!!; 10 Number Properties set., 11 New DS set.


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Re: m07 q33   [#permalink] 29 Nov 2013, 01:35
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