Quote:
A photography dealer ordered 60 Model X cameras to be sold for $250 each, which represents a 20 percent markup over the dealer’s initial cost for each camera. Of the cameras ordered, 6 were never sold and were returned to the manufacturer for a refund of 50 percent of the dealer's initial cost. What was the dealer's approximate profit or loss as a percent of the dealer’s initial cost for the 60 cameras?
A. 7% loss
B. 13% loss
C. 7% profit
D. 13% profit
E. 15% profit
We can use smart number here to solve this problem.
Let,
Dealer bought 10 cameras with $10 per camera.
Total cost=$100
Sold 9 cameras (deducting 10% cameras that was bought) with $12 (20% markup over the initial cost) per head..
refund=$5 (50% of the initial cost) and remaining cameras=1 (the camera which was unsold)..
So, total revenue=9×12+5=$113
So, the profit is 13%, which is choice
D.
We can solve this question by ''visually'' to save time as it is considered as
very hard question.
Look the answer option again:
A. 7% loss
B. 13% loss
C. 7% profit
D. 13% profit
E. 15% profit
Here, A Vs C=
7% loss VS
7% profit;
Also, B VS D=
13% loss VS
13% profit.
But, there is no consistency with the choice E (only 15% profit). We can cross choice E because of inconsistency in the answer choice. There is no point to put just 15% profit where other choices A,B,C,D) put SAME figure with
profit VS
loss. I mean there is NO
loss VS profit in choice E (it only talks about 15% profit. if another option like F says 15% loss, then we should consider this choice too because it holds
Loss VS Profit). If E is the correct choice, GMAC also put 15% loss as a
trap.As visually it seems that it is all about profit, we can cancel choice A and B, because dealer get profit. So remaining choice are C and D. Can we randomly guess between C and D?
Or,
We can solve it by the following way..
Buying cost=60×250=>15000
Hope it helps...
Sales=54 (60-refund 6)×300 (250+20% markup for the initial cost)=>16200
Refund=6×125 (50% of initial cost)=>750
Total revenue=16200+750=>16950
So, dealer gets profit=16950-15000=>1950
So, approximate profit for 60 cameras=\(\frac{1950×100}{1500}\)=>13%
So, the correct choice is
D.