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A soft drink company currently sells its most popular product in one-l

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A soft drink company currently sells its most popular product in one-l  [#permalink]

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New post 07 Mar 2017, 02:05
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A soft drink company currently sells its most popular product in one-liter containers for $3, yielding a 20% profit margin on the cost. If cost is proportional to volume, by what percent should the company reduce the volume of the container to yield a 50% profit margin on the cost, assuming the selling price remains the same?

A. 10%
B. 20%
C. 25%
D. 33%
E. 50%

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Re: A soft drink company currently sells its most popular product in one-l  [#permalink]

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New post 07 Mar 2017, 05:00
2
since the profit % is 20, the cost price is 2.5$.
cost of 1 litre is 2.5$.

since selling price remains same,, inorder to get 50% margin the cost price should be 2$.

hence reduce the volume by 20%

ans B
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New post 07 Mar 2017, 13:09
1
Let the cost of one-liter container = $100x
After 20% profit the Selling Price of the one-liter container = $120x
Given Selling Price of the one-liter container = $3

Finding value of X => 120x= 3 => x=1/40
therefore cost of one-liter container = $100x = 100 * 1/40 = $2.5

Now to get 50% profit, the selling price would be $150x, if the initial cost is 100x
Given: Selling Price remains the same, therefore, 150x=3 => x=1/50
Cost Price = $100x = 100* 1/50 = $2

therefore the reduction in volume = (2.5 - 2) *100 /2.5 = 20%

Answer is B. 20%
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Re: A soft drink company currently sells its most popular product in one-l  [#permalink]

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New post 07 Mar 2017, 14:58
(3-C)/C=0,2 C=2,5
(3-C)/C=0,5 C=2
(2,5-2)/2,5=-0,2

Answer by 20% (B)
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Re: A soft drink company currently sells its most popular product in one-l  [#permalink]

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New post 07 Mar 2017, 15:02
Bunuel wrote:
A soft drink company currently sells its most popular product in one-liter containers for $3, yielding a 20% profit margin on the cost. If cost is proportional to volume, by what percent should the company reduce the volume of the container to yield a 50% profit margin on the cost, assuming the selling price remains the same?

A. 10%
B. 20%
C. 25%
D. 33%
E. 50%


A little confusing because a profit margin is never calculated as a percent of cost rather than percent of revenue...

Old
Revenue 3
Expense 2.5 80.00%
Gross Profit 0.5 20.00%

New
Revenue 3
Expense 2 50.00%
Gross Profit 1 50.00%


0.5/2.5 = 20%
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A soft drink company currently sells its most popular product in one-l  [#permalink]

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New post 21 Mar 2017, 05:12
4
Bunuel wrote:
A soft drink company currently sells its most popular product in one-liter containers for $3, yielding a 20% profit margin on the cost. If cost is proportional to volume, by what percent should the company reduce the volume of the container to yield a 50% profit margin on the cost, assuming the selling price remains the same?

A. 10%
B. 20%
C. 25%
D. 33%
E. 50%


OFFICIAL SOLUTION



Begin by finding the cost of the 1-liter container: 1.2c = 3, and c = 2.5. Next, let’s figure out how much the product cost should be to create the 50% profit margin: 1.5x = 3, and x = 2. Since cost is proportional to volume, the percent change in cost is the same as the percent change in volume: \(\frac{(2.5 - 2.0)}{2.5} = \frac{0.5}{2.5}\)= 20%.
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Re: A soft drink company currently sells its most popular product in one-l  [#permalink]

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New post 04 Apr 2017, 20:40
1L=3
Sale price = 3
Cost price = 3*(5/6) = 2.50
Cost price for profit to equal 50% of cost price = 2
2.50*0.8=2. A 20% reduction.
If volume is proportional to cost then volume must also be reduced by 20%. B

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Re: A soft drink company currently sells its most popular product in one-l  [#permalink]

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New post 16 Jun 2017, 19:18
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A soft drink company currently sells its most popular product in one-l  [#permalink]

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New post 08 Jul 2017, 12:22
IdiomSavant wrote:
Bunuel wrote:
A soft drink company currently sells its most popular product in one-liter containers for $3, yielding a 20% profit margin on the cost. If cost is proportional to volume, by what percent should the company reduce the volume of the container to yield a 50% profit margin on the cost, assuming the selling price remains the same?

A. 10%
B. 20%
C. 25%
D. 33%
E. 50%


A little confusing because a profit margin is never calculated as a percent of cost rather than percent of revenue...

Old
Revenue 3
Expense 2.5 80.00%
Gross Profit 0.5 20.00%

New
Revenue 3
Expense 2 50.00%
Gross Profit 1 50.00%


0.5/2.5 = 20%


Exactly, the wording is bad but probably intentionally so. A 20% profit margin on the cost means X * 1.2 = 3. So 3/1.2 is $2.5, which is the cost. If 2.5 is the cost what do we need to reduce it buy to get to 50%? well X *1.5 = 3 and 3/1.5 = 2. Therefore we reduced the volume from 2.5 to 2 or 0.5 /2.5 or 20%
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Re: A soft drink company currently sells its most popular product in one-l  [#permalink]

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New post 08 Jul 2017, 19:28
SP = $3, P = 0.2, so CP = $3/1.2 = $2.5.
For P to be 0.5, CP = $3/1.5 = $2.

Since the volume is proportional to the cost, the volume should be reduced by (1 - 2/2.5) = 20%. Ans - B.
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Re: A soft drink company currently sells its most popular product in one-l  [#permalink]

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Re: A soft drink company currently sells its most popular product in one-l   [#permalink] 18 Aug 2018, 05:21
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