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# A distributor sells a product through an on-line store, whic

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Manager
Joined: 30 May 2013
Posts: 153
Location: India
Concentration: Entrepreneurship, General Management
GPA: 3.82
A distributor sells a product through an on-line store, whic  [#permalink]

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26 Mar 2014, 09:04
2
7
00:00

Difficulty:

85% (hard)

Question Stats:

55% (02:12) correct 45% (01:44) wrong based on 192 sessions

A. 18
B. 21.6
C. 22
D. 22.5
E. 27

Producer price = $15; The distributor wants to maintain a 20% profit on the cost of the item, thus he must get$15*1.2 = $18 after the store takes a commission of 20% of the final price --> (final price)*0.8 =$18 --> (final price) = $22.5. Answer: D. _________________ SVP Status: The Best Or Nothing Joined: 27 Dec 2012 Posts: 1817 Location: India Concentration: General Management, Technology WE: Information Technology (Computer Software) Re: A distributor sells a product through an on-line store, whic [#permalink] ### Show Tags 26 Mar 2014, 20:30 1 Cost price to distributor = 15 Lets say he adds "x" to it for online display Selling price on web display = (15+x) Online merchant takes 20% commission; so balance = $$80 * \frac{(15+x)}{100}$$ ......(1) Distributor wants to earn 20% i.e 15 + 3 = 18 ........... (2) Equating (1) & (2) $$80 * \frac{(15+x)}{100} = 18$$ x = 7.5 Selling price should be 15 + 7.5 = 22.5 = Answer = D _________________ Kindly press "+1 Kudos" to appreciate Manager Joined: 30 May 2013 Posts: 153 Location: India Concentration: Entrepreneurship, General Management GPA: 3.82 Re: A distributor sells a product through an on-line store, whic [#permalink] ### Show Tags 26 Mar 2014, 23:54 Cool solutions. Another way to solve this: Let Price set by the Distributor on Online store : S So the Distributor need 20% profit on the producer cost of$15 = 18$S=18+S*0.2 S-S*0.2=18 S*.8=18 S=22.5 Regards, Rrsnathan. Press Kudos it this helped Manager Joined: 24 Jul 2016 Posts: 50 Re: A distributor sells a product through an on-line store, whic [#permalink] ### Show Tags 15 Jul 2017, 16:00 rrsnathan wrote: A distributor sells a product through an on-line store, which take a commission of 20% of the price set by the distributor. The distributor obtains the product from a producer at the price of$15 per item. What is the price that the buyer observers on-line if the distributor wants to maintain a 20% profit on the cost of the item?

A. 18
B. 21.6
C. 22
D. 22.5
E. 27

the qn does not mention whether the commission is also part of the cost. its confusing.
Intern
Joined: 13 May 2017
Posts: 8
A distributor sells a product through an on-line store, whic  [#permalink]

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15 Jul 2017, 16:21

A. 18
B. 21.6
C. 22
D. 22.5
E. 27

Producer price = $15; The distributor wants to maintain a 20% profit on the cost of the item, thus he must get$15*1.2 = $18 after the store takes a commission of 20% of the final price --> (final price)*0.8 =$18 --> (final price) = $22.5. Answer: D. Hi Bunuel, please mention in the question that 'cost' does not include the commission that needs to be paid by the distributor. Otherwise it is confusing. Senior Manager Joined: 28 Jun 2015 Posts: 290 Concentration: Finance GPA: 3.5 Re: A distributor sells a product through an on-line store, whic [#permalink] ### Show Tags 17 Jul 2017, 20:01 rrsnathan wrote: A distributor sells a product through an on-line store, which take a commission of 20% of the price set by the distributor. The distributor obtains the product from a producer at the price of$15 per item. What is the price that the buyer observers on-line if the distributor wants to maintain a 20% profit on the cost of the item?

A. 18
B. 21.6
C. 22
D. 22.5
E. 27

It was my understanding that only profits and the respective costs can be added to the cost of the product at each stage, anything else must be subsumed within the maximum retail price of the product, so it is implied that the commission is inclusive of the displayed price.

Price including the commission = $$15 + 0.2(15) = 18.$$

The e-seller takes commission on this $$18$$, so his display price must be inclusive of his commission.

So we have, $$18 +$$commission = $$100\%$$ of display price. Since the commission is $$20\%$$, the $$18$$ corresponds to $$80\%$$ of the display price, therefore the display price = $$\frac{18}{0.8} = 22.5.$$ Ans - D.
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Re: A distributor sells a product through an on-line store, whic  [#permalink]

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20 Jul 2017, 16:52
1
rrsnathan wrote:
A distributor sells a product through an on-line store, which take a commission of 20% of the price set by the distributor. The distributor obtains the product from a producer at the price of $15 per item. What is the price that the buyer observers on-line if the distributor wants to maintain a 20% profit on the cost of the item? A. 18 B. 21.6 C. 22 D. 22.5 E. 27 Since it costs the distributor$15 per item and he wants to have a 20% profit, he needs to sell the product (if there is no commission) for:

15(1.2) = 18

However, since there is a commission of 20% of the price set by the distributor, we can let x = the price set by the distributor and create the following equation:

x - 0.2x = 18

0.8x = 18

x = 18/0.8 = 180/8 = 22.5

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Re: A distributor sells a product through an on-line store, whic  [#permalink]

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07 Mar 2019, 07:00
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Re: A distributor sells a product through an on-line store, whic   [#permalink] 07 Mar 2019, 07:00
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