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# GMATClub test m07 q

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Intern
Joined: 25 Oct 2009
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Schools: Wharton, HBS, Stanford

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04 Jan 2010, 07:38
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A car has been sold by a dealership for a profit of 25%. If the dealership bought it from a manufacturer that in turn made a profit of 12.5%, what was the end price to the consumer if the cost to manufacture the car was $12,000? A. 12,750 B. 13,750 C. 15,500 D. 16,150 E. 16,875 OA: The car cost$12,000 to manufacture and the profit margin of the manufacturer was 12.5% or $1,500. Therefore, the dealer paid$13,500. If the dealer made 25% profit or $3,375, the end price to consumer was$16,875.

The problem is that profit margin for manufacturer is
$$\frac{Profit}{Sales}=\frac{1,500}{13,500}=11,(1)%$$. The same problem is for dealership's.

For current explanation the term "mark-up" should be used in question.
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Location: Tbilisi, Georgia
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Re: GMATClub test m07 q [#permalink]

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06 Jan 2010, 01:46
IMO that's a valid remark, profit margins have Sales value in denominator, they measure profit/sales relation

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Senior Manager
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Re: GMATClub test m07 q [#permalink]

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27 Feb 2012, 09:52
$$12000*\frac{9}{8}*\frac{5}{4} = 375*45$$

you don't really need to calculate 375*45, as the only answer choice that has 5 in the units place is e (16,875).

ans: e
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Re: GMATClub test m07 q   [#permalink] 27 Feb 2012, 09:52
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# GMATClub test m07 q

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