NEW HERE? LEARN MORE
closeclose
Last visit was: 26 Apr 2024, 01:10 It is currently 26 Apr 2024, 01:10
Decision Tracker
My Rewards
New posts
New comers' posts

Close
GMAT Club Daily Prep
Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History
Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.
Go to My Error Log Learn more
Close
Request Expert Reply
Confirm Cancel

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

SORT BY:
Date
Kudos
Tags:
Find Similar Topics 
Show Tags
Hide Tags
User avatar
rrsnathan
Manager
Manager
Joined: 30 May 2013
Posts: 126
Own Kudos [?]: 358 [21]
Given Kudos: 72
Location: India
Concentration: Entrepreneurship, General Management
Schools: Booth '16 Carroll '16 ESADE '16 Foster '16 HEC Jan'16 Haas EWMBA '16 Tuck '16
GPA: 3.82
Send PM
GMAT ToolKit User
A distributor sells a product through an on-line store, whic [#permalink] New post   26 Mar 2014, 09:04
3
Kudos
18
Bookmarks
00:00
A
B
C
D
E

Difficulty:

65% (hard)

Question Stats:

58% (02:12) correct 42% (01:49) wrong based on 428 sessions
Hide Show timer Statistics
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
ShowHide Answer
Official Answer
D
Most Helpful Reply
User avatar
L
Bunuel
Math Expert
Joined: 02 Sep 2009
Posts: 92921
Own Kudos [?]: 619088 [5]
Given Kudos: 81596
Send PM
CAT Tests Forum Quiz Mode
Re: A distributor sells a product through an on-line store, whic [#permalink] New post   26 Mar 2014, 09:26
5
Kudos
Expert Reply
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


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.
General Discussion
avatar
PareshGmat
SVP
SVP
Joined: 27 Dec 2012
Status:The Best Or Nothing
Posts: 1562
Own Kudos [?]: 7208 [2]
Given Kudos: 193
Location: India
Concentration: General Management, Technology
WE:Information Technology (Computer Software)
Send PM
Re: A distributor sells a product through an on-line store, whic [#permalink] New post   26 Mar 2014, 20:30
1
Kudos
1
Bookmarks
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
User avatar
P
JeffTargetTestPrep
Target Test Prep Representative
Joined: 04 Mar 2011
Status:Head GMAT Instructor
Affiliations: Target Test Prep
Posts: 3043
Own Kudos [?]: 6275 [2]
Given Kudos: 1646
Send PM
Re: A distributor sells a product through an on-line store, whic [#permalink] New post   20 Jul 2017, 16:52
2
Kudos
Expert Reply
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

Answer: D
avatar
B
Takdir
Intern
Intern
Joined: 24 Jul 2016
Posts: 43
Own Kudos [?]: 14 [1]
Given Kudos: 250
Send PM
Re: A distributor sells a product through an on-line store, whic [#permalink] New post   15 Jul 2017, 16:00
1
Kudos
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.
User avatar
rrsnathan
Manager
Manager
Joined: 30 May 2013
Posts: 126
Own Kudos [?]: 358 [0]
Given Kudos: 72
Location: India
Concentration: Entrepreneurship, General Management
Schools: Booth '16 Carroll '16 ESADE '16 Foster '16 HEC Jan'16 Haas EWMBA '16 Tuck '16
GPA: 3.82
Send PM
GMAT ToolKit User
Re: A distributor sells a product through an on-line store, whic [#permalink] New post   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 :)
avatar
B
Turchet
Intern
Intern
Joined: 13 May 2017
Posts: 6
Own Kudos [?]: 2 [0]
Given Kudos: 4
Send PM
A distributor sells a product through an on-line store, whic [#permalink] New post   15 Jul 2017, 16:21
We know that margin is revenue over costs. The cost in the case will be the price that the buyer will see online. The costs will be the cost of the product itself ($15) and the margin that the online store gets (20% of the price), so:

\(p = \frac{revenue}{costs}\)


\(1.2 = \frac{p}{15+0,2p} \rightarrow p = $22,5\)

Hope it helps.
User avatar
B
shakun
Intern
Intern
Joined: 26 Mar 2017
Posts: 21
Own Kudos [?]: 10 [0]
Given Kudos: 32
GMAT 1: 720 Q50 V38
Send PM
Re: A distributor sells a product through an on-line store, whic [#permalink] New post   17 Jul 2017, 16:08
Bunuel wrote:
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


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.
User avatar
B
TimeTraveller
Senior Manager
Senior Manager
Joined: 28 Jun 2015
Posts: 250
Own Kudos [?]: 293 [0]
Given Kudos: 47
Concentration: Finance
GPA: 3.5
Send PM
Re: A distributor sells a product through an on-line store, whic [#permalink] New post   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.
User avatar
D
exc4libur
SVP
SVP
Joined: 24 Nov 2016
Posts: 1720
Own Kudos [?]: 1344 [0]
Given Kudos: 607
Location: United States
Send PM
Re: A distributor sells a product through an on-line store, whic [#permalink] New post   27 Jan 2020, 09:12
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


cost $15
net 20% $15 = $3
sale price = $15+3 = $18
final price x = $18+0.2x, 0.8x = 18, x = $22.5

Ans (D)
User avatar
B
007saisurya
Intern
Intern
Joined: 28 Jan 2023
Posts: 18
Own Kudos [?]: 6 [0]
Given Kudos: 4
Location: India
Concentration: Finance, Economics
Schools: ISB NUS '26
GPA: 4
Send PM
Re: A distributor sells a product through an on-line store, whic [#permalink] New post   11 Jul 2023, 20:08
.8x-15/15 *100 = 20
.8x as seller gives 20% away as commission
solve for x
GMAT Club Bot
gmatclubot
Re: A distributor sells a product through an on-line store, whic [#permalink]
11 Jul 2023, 20:08
Moderators:
Bunuel
Math Expert
92918 posts
yashikaaggarwal
Senior Moderator - Masters Forum
3137 posts

Powered by phpBB © phpBB Group | Emoji artwork provided by EmojiOne
Main navigation
GMAT Resources
Partners
MBA Resources
www.gmac.com|www.mba.com | | GMAT Club Rules | Terms and Conditions