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A dairyman pays Rs. 6.40 per liter of milk. He adds water

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Veritas Prep GMAT Instructor
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Re: A dairyman pays Rs. 6.40 per liter of milk. He adds water  [#permalink]

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New post 24 May 2017, 04:36
jy295 wrote:
VeritasPrepKarishma wrote:
qlx wrote:
A dairyman pays Rs. 6.40 per liter of milk. He adds water and sells the mixture at Rs. 8per liter, thereby making 37.5% profit. The proportion of water to milk received by the customers is

(a) 1:10
(b) 1:12
(c) 1:15
(d) 1:20
(e) 1:25


You can reason it out like this:

Selling price is Rs 8 per liter with a profit of 37.5% (which is 3/8) of Cost Price.

Cost Price*(1 + 3/8) = 8
Cost Price = 64/11
So for every liter he sells, he uses only Rs. 64/11 worth of milk.

In Rs 6.4, you get 1 lt of milk
In Rs 64/11 you get 64/(11*6.4) = 10/11 lts of milk

Since he uses only 10/11 lts of milk, he must be putting 1/11 lts of water in it.
So water:milk = 1:10


Karishma - Can you please confirm whether the GMAT officially defines profit margin this way? In the U.S. financial services industry, profit margin is uniformly calculated as a percent of revenue (i.e. (Revenue - Cost) / Revenue). Hence, 37.5% profit margin would be 37.5% of $8 sales price, as opposed to $8 = Cost Price * (1+37.5%). Just want to make sure this is an official GMAT definition and not a cultural difference as I noticed the problem was written with Rs. being the currency. Thanks!


As far as I know, profit margin is universally calculated as a percent of revenue.
This question gives you profit as a percentage, not profit margin.
Profit in percentage terms will be on Cost.
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A dairyman pays Rs. 6.40 per liter of milk. He adds water  [#permalink]

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New post 03 Sep 2018, 07:36
lets assume he buys 1 ltr of milk at 6.4 rs.

(8.0/6.4) profit % if he was selling 1 ltr of pure milk.

x be the amount of water added to 1 ltr of milk.

(1+x)(8.0/6.4) = 1.375

==> x = 0.1
for 1 ltr 0.1 of water ==>1:10
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Re: A dairyman pays Rs. 6.40 per liter of milk. He adds water  [#permalink]

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New post 03 Sep 2018, 08:55
Let y amount of water be added to 1ltr of water , so {8(1+y)-6.4}/6.4 = 37.5/100
So on solving y=1/10
Hence water to milk ratio is 1/10 so ans is A

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Re: A dairyman pays Rs. 6.40 per liter of milk. He adds water  [#permalink]

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New post 04 Sep 2018, 07:58
6.4Rs per liter of milk (To make it easier I multiplied with 10) --> 64Rs per liter of milk
8Rs per liter of milk + water (To make it easier I multiplied with 10) --> 80Rs per liter of milk + water

We know that dairyman makes a profi of 3/8 (0.375), M=milk and W=water

64M * 11/8 = 80 * (M+W)
88M = 80M + 80W
8M = 80W
M=10W --> 1:10 ration

I got the correct answer, but is this the correct approach?
Re: A dairyman pays Rs. 6.40 per liter of milk. He adds water &nbs [#permalink] 04 Sep 2018, 07:58

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