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A merchant purchased a jacket for $60 and then determined [#permalink]

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06 Nov 2010, 14:32

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59% (02:15) correct
41% (01:00) wrong based on 396 sessions

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A merchant purchased a jacket for $60 and then determined a selling price that equalled the purchase price of the jacket plus a markup that was 25 percent of the selling price. During a sale, the merchant discounted the selling price by 20 percent and sold the jacket. What was the merchant’s gross profit on this sale?

A merchant purchased a jacket for $60 and then determined a selling price that equalled the purchase price of the jacket plus a markup that was 25 percent of the selling price. During a sale, the merchant discounted the selling price by 20 percent and sold the jacket. What was the merchant’s gross profit on this sale?

(A) $0 (B) $3 (C) $4 (D) $12 (E) $15

No, answer A is not correct. Note that we are told that: "markup ... was 25 percent of the selling price".

Step by step:

Let the markup be \($x\), so \(x\) must be 25% of the selling price \(60+x\): \(x=0.25(60+x)\) --> \(x=20\) --> selling price will be \(60+20=80\).

The price after discount of 20% will be \(80*0.8=64\) --> gross profit on the sale will be final selling price - cost of the jacket = \($64 - $60 = $4\).

Re: A merchant purchased a jacket for $60 and then determined a selling pr [#permalink]

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02 Apr 2011, 07:45

Acer86 wrote:

A merchant purchased a jacket for $60 and then determined a selling price that equalled the purchase price of the jacket plus a markup that was 25 percent of the selling price. During a sale, the merchant discounted the selling price by 20 percent and sold the jacket. What was the merchant’s gross profit on this sale? (A) $0 (B) $3 (C) $4 (D) $12 (E) $15

Selling price is sp, so \(sp=60+0.25*sp\), where \(m*0.25\) is a markup sp=80 Discounted the sp by 20% means \(sp-0.2sp=0.8sp\) \(0.8sp=0.8*80=64\) Gross profit = 64-purchase price = 64-60=4 (C)

A merchant purchased a jacket for $60 and then determined a selling price that equalled the purchase price of the jacket plus a markup that was 25 percent of the selling price. During a sale, the merchant discounted the selling price by 20 percent and sold the jacket. What was the merchant’s gross profit on this sale? (A) $0 (B) $3 (C) $4 (D) $12 (E) $15

First of all, the question has very ambiguous language. They have to distinguish between marked price and selling price and they fail to do that. This is what the question needs to change:

A merchant purchased a jacket for $60 and then determined a mark-up price that equaled the purchase price of the jacket plus a markup that was 25 percent of the mark-up price. During a sale, the merchant discounted the mark-up price by 20 percent and sold the jacket. What was the merchant’s gross profit on this sale?

Here, mark up was 25% of mark-up price so purchase price was 75% of mark-up price i.e. purchase price was increased by 33.33% to get mark up price (25 is 33.33% of 75)

\((1 + Mark Up%) * (1 - Discount%)= (1 + Profit%)\) \((1 + \frac{1}{3})*(1- \frac{1}{5}) = (1 + Profit%)\) \(Profit% = \frac{1}{15}\) Hence you get a profit of $1 for every $15 of purchase price. Since purchase price is 4*15, profit will be 4.

I suspect you read the question like this: Merchant purchases jacket for $60 Merchant prices jacket at 25% more than purchase price. 20% more than $60 = $75 Merchant sells jacket at %20 off. 20% off of $75 = $60 Merchant makes $0 because he bought and sold at $60

But the question actually reads like this: Merchant purchases jacket for $60 Merchant prices jacket at purchase price + 25% of selling price. Note the difference.

Let's break this down. Selling price = purchase price + 25% of selling price 75% of Selling price = purchase price Selling price = $60/75% = $80

Now we can finish the question... Merchant sells jacket at %20 off. 20% off of $80 = $64 Merchant makes $4 because he bought at $60 and sold at $64.

Let the cost price is C,selling price is S. C=60. S=C+0.25(S) 0.75(S)=C 3/4(S)=60 S=60*4/3=80. seller gave a discount of 20% on selling price which is 80. 80*1/5=16(discount price) Selling price -Discount price=80-16=64 (selling price after discount) Gross profit= selling price after discount- cost price.=64-60=4

Re: A merchant purchased a jacket for $60 and then determined [#permalink]

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19 Feb 2015, 03:41

Hello from the GMAT Club BumpBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

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Re: A merchant purchased a jacket for $60 and then determined [#permalink]

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20 Oct 2016, 00:08

Hello from the GMAT Club BumpBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.
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The difficulty level is calculated automatically based on the timer stats from the users which attempted the question. So, yes it is a 700-level question.
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Re: A merchant purchased a jacket for $60 and then determined [#permalink]

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15 May 2017, 23:15

Bunuel wrote:

saarthak29 wrote:

hey, is this really 700+ level question in gmat?

The difficulty level is calculated automatically based on the timer stats from the users which attempted the question. So, yes it is a 700-level question.

The difficulty level is calculated automatically based on the timer stats from the users which attempted the question. So, yes it is a 700-level question.

hey, is it possible to send you private message?

If you have a question or query it's better to post directly on the forum.
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A merchant purchased a jacket for $60 and then determined a selling price that equalled the purchase price of the jacket plus a markup that was 25 percent of the selling price. During a sale, the merchant discounted the selling price by 20 percent and sold the jacket. What was the merchant’s gross profit on this sale?

(A) $0 (B) $3 (C) $4 (D) $12 (E) $15

We are given that a jacket was purchased for 60 dollars. The jacket was sold for a price that equalled the purchase price of the jacket plus a markup that was 25 percent of the selling price. We can let the selling price = p, and thus the selling price is 60 + 0.25p. We can create the following equation and solve for p:

p = 60 + 0.25p

Multiply the equation by 4, we have:

4p = 240 + p

3p = 240

p = 80

Since the selling price was then discounted 20%, the discounted price was:

0.8(80) = 64

Thus, the profit on the sale was 64 - 60 = $4.

Answer: C
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