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# A retailer acquires items at a cost of N dollars apiece, sells them on

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Manager
Joined: 01 Sep 2016
Posts: 207
GMAT 1: 690 Q49 V35
A retailer acquires items at a cost of N dollars apiece, sells them on [#permalink]

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19 Sep 2017, 10:56
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Difficulty:

85% (hard)

Question Stats:

45% (02:24) correct 55% (03:11) wrong based on 38 sessions

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A retailer acquires items at a cost of N dollars apiece, sells them online at a 40% mark-up, and then pays to ship the items to the buyers. Shipping costs are currently 10% of the selling price of each item, and the retailer incurs no other costs beyond those of acquiring and shipping items. If shipping costs increase to 12% of the selling price of each item, then the retailer's net profit on each sale will decrease by

(A) between 2 and 4 percent
(B) between 4 and 6 percent
(C) between 6 and 8 percent
(D) between 8 and 10 percent
(E) more than 10 percent
[Reveal] Spoiler: OA

_________________

we shall fight on the beaches,
we shall fight on the landing grounds,
we shall fight in the fields and in the streets,
we shall fight in the hills;
we shall never surrender!

Manager
Joined: 01 Sep 2016
Posts: 207
GMAT 1: 690 Q49 V35
Re: A retailer acquires items at a cost of N dollars apiece, sells them on [#permalink]

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19 Sep 2017, 11:05
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Here is a quick and easy way to solve this complicatedly worded problem.

Lets assume N= 100. Now Selling price is marked by 40%, so SP(Selling Price) is equal to 140, and the total profit is equal to 40. Now Shipping costs are 10% of the total Selling Price, so Shipping Costs are equal to 14. So Total Profit realized by the retailer is 40-14= 26.

Now what happens next? Shipping Cost increases to 12%, a total increase of 2%, so new shipping cost becomes 16.8. New Net profit realized is equal to 23.2.

So Total Percentage decrease in Net Profits is equal to $$2.8/26 * 100$$ = approx. 10.7...

_________________

we shall fight on the beaches,
we shall fight on the landing grounds,
we shall fight in the fields and in the streets,
we shall fight in the hills;
we shall never surrender!

Re: A retailer acquires items at a cost of N dollars apiece, sells them on   [#permalink] 19 Sep 2017, 11:05
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