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11 00:00

Difficulty:   55% (hard)

Question Stats: 64% (01:39) correct 36% (01:31) wrong based on 392 sessions

### HideShow timer Statistics 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

Originally posted by Sarang on 06 Nov 2010, 14:32.
Last edited by Bunuel on 05 Feb 2012, 14:55, edited 1 time in total.
Edited the question and added the OA
Math Expert V
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Re: Profit from a Jacket  [#permalink]

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12
5
Sarang 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

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 = $$64 - 60 = 4$$.

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Re: Profit from a Jacket  [#permalink]

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1
60*1.25=75
75*0.8=60
60-60=0
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Re: A merchant purchased a jacket for $60 and then determined a selling pr [#permalink] ### Show Tags 1 Markup = x x = 0.25(60 + x) => 3x/4 = 15 => x = 20 So SP = 80 But Actual SP = 0.8 * 80 = 64 So profit =$4

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Re: A merchant purchased a jacket for $60 and then determined a selling pr [#permalink] ### Show Tags 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) Veritas Prep GMAT Instructor D Joined: 16 Oct 2010 Posts: 9433 Location: Pune, India Re: A merchant purchased a jacket for$60 and then determined a selling pr  [#permalink]

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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

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. For more on the formula and concept of Mark up, discount, check: http://www.veritasprep.com/blog/2011/02 ... nt-profit/ _________________ Karishma Veritas Prep GMAT Instructor Learn more about how Veritas Prep can help you achieve a great GMAT score by checking out their GMAT Prep Options > Director  Joined: 01 Feb 2011 Posts: 629 Re: A merchant purchased a jacket for$60 and then determined a selling pr  [#permalink]

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Actual Cost = $60 SP = Actual Cost + Mark up = Actual Cost + 25% SP = 60*100/75 on sale SP = 80/100(60*75/100) = 64 Gross profit =$4

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5
This is a bit tricky, it's all in the details.

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

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2
Let selling price = x
So, x = 60 + 25x/100
Calculating above, x = 80
Selling price = 80

20% Discount on Selling price = 64
So, profit = 64-60 = 4 Answer = C
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SP = selling price

PP=$60 SP=PP+0.25SP --> 0.75SP=0.60 -->SP=$80

20% off SP = 0.80(80) = $64 (price customer paid) 64-60 =$4 profit

C.
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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.
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saarthak29 wrote:
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.

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

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Re: A merchant purchased a jacket for $60 and then determined [#permalink] ### Show Tags Hello VeritasPrepKarishma, Firstly, apologies for asking a clarification on an old post!! I am not able to follow the highlighted part of the solution. I do understand that you have used the successive percentage formula. But unable to understand why is - $$(1 + \frac{1}{3})*(1- \frac{1}{5}) = (1 + Profit)$$%? Can you please explain in a bit more detail. Thanks in advance! VeritasPrepKarishma wrote: 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 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)

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

For more on the formula and concept of Mark up, discount, check:
http://www.veritasprep.com/blog/2011/02 ... nt-profit/

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GMAT 1: 800 Q51 V49 GRE 1: Q170 V170 Re: A merchant purchased a jacket for $60 and then determined [#permalink] ### Show Tags Hi All, This question is essentially just a "math" question. How you set up the math (and work through the steps) is up to you though (you can use fractions, decimals or percents): Purchase price =$60
Selling price = $60 + 25% of the Final Price Final Price = X$60 + .25X = X
$60 = .75X$60 = (3/4)(X)

Now, multiply both sides by 4/3
$60(4/3) = (4/3)(3/4)X$240/3 = (12/12)X
$80 = X During the sale, the selling price was discounted by 20%$80 - 20%($80) = Final Selling Price$80 - 1/5($80) =$80 - $16 =$64

The Gross Profit = Final Price - Purchase Price
$64 -$60 = $4 Final Answer: GMAT assassins aren't born, they're made, Rich _________________ 760+: Learn What GMAT Assassins Do to Score at the Highest Levels Contact Rich at: Rich.C@empowergmat.com *****Select EMPOWERgmat Courses now include ALL 6 Official GMAC CATs!***** # Rich Cohen Co-Founder & GMAT Assassin Follow Special Offer: Save$75 + GMAT Club Tests Free
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