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A vendor sells specialty gift baskets at a price of $50.00 per basket

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Joined: 09 Apr 2017
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Location: Nepal
Concentration: Finance, Entrepreneurship
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A vendor sells specialty gift baskets at a price of $50.00 per basket  [#permalink]

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New post 28 Aug 2018, 08:00
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Question Stats:

70% (02:10) correct 30% (03:18) wrong based on 27 sessions

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A vendor sells specialty gift baskets at a price of $50.00 per basket, which represents a markup of 25% above the cost to produce each basket. The vendor prepared and delivered an order of 120 baskets to a customer. However, that customer returned 15 baskets and requested a partial refund. How much should the vendor refund per basket so that the vender makes a 20% profit on the initial cost of the 120 baskets?

$10
$16
$20
$34
$40
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Re: A vendor sells specialty gift baskets at a price of $50.00 per basket  [#permalink]

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New post 28 Aug 2018, 08:21
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pratik2018 wrote:
A vendor sells specialty gift baskets at a price of $50.00 per basket, which represents a markup of 25% above the cost to produce each basket. The vendor prepared and delivered an order of 120 baskets to a customer. However, that customer returned 15 baskets and requested a partial refund. How much should the vendor refund per basket so that the vender makes a 20% profit on the initial cost of the 120 baskets?

$10
$16
$20
$34
$40



25% above cost resulting in 50 = 50*100/125=40
So cost of 120 baskets = 40*120=4800
20% above it =4800*120/100=5760

Initial selling price = 50*120=6000

So refund =6000-5760=240

So refund per basket = 240/15=16

B
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Re: A vendor sells specialty gift baskets at a price of $50.00 per basket  [#permalink]

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New post 28 Aug 2018, 08:57
pratik2018 wrote:
A vendor sells specialty gift baskets at a price of $50.00 per basket, which represents a markup of 25% above the cost to produce each basket. The vendor prepared and delivered an order of 120 baskets to a customer. However, that customer returned 15 baskets and requested a partial refund. How much should the vendor refund per basket so that the vender makes a 20% profit on the initial cost of the 120 baskets?

$10
$16
$20
$34
$40


OA: B
Selling price : $50.00 per basket

Selling price = Cost price + Markup = Cost price + 25%Cost price=1.25 Cost price

Cost Price \(= \frac{Selling price}{1.25}= \frac{$50.00}{1.25} = $40.00 per basket\)

Cost of Selling \(120\) baskets = \($40.00 *120\)

Profit margin without considering refund: 25% of total cost

Profit margin after considering refund : 20% of total cost

Total refund = (25% -20%) of total cost =5% of total cost \(= \frac{5}{100}*$40.00 *120\)

Refund per basket \(=\frac{\frac{5}{100}*$40.00 *120}{15}=$16\)
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Re: A vendor sells specialty gift baskets at a price of $50.00 per basket  [#permalink]

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New post 28 Aug 2018, 10:57
pratik2018 wrote:
A vendor sells specialty gift baskets at a price of $50.00 per basket, which represents a markup of 25% above the cost to produce each basket. The vendor prepared and delivered an order of 120 baskets to a customer. However, that customer returned 15 baskets and requested a partial refund. How much should the vendor refund per basket so that the vender makes a 20% profit on the initial cost of the 120 baskets?

$10
$16
$20
$34
$40



The $50 selling price yields 25% profit and thus is equal to 125% of the cost per basket.
The final selling price yields 20% profit and thus is equal to 120% of the cost per basket.
The following proportion is implied:
\(\frac{50}{x} = \frac{125}{120}\)
\(\frac{50}{x} = \frac{25}{24}\)
\(25x = 24*50\)
\(x = 24*2\)
\(x = 48\)

The $48 final selling price is $2 less than the original $50 selling price, implying that $2 must be refunded for each of the 120 baskets:
\(2*120 = 240\)
Since this $240 refund is divided equally among the 15 returned baskets, the refund per basket = \(\frac{240}{15} = \frac{80}{5} = 16\)


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Re: A vendor sells specialty gift baskets at a price of $50.00 per basket &nbs [#permalink] 28 Aug 2018, 10:57
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