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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.
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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06 Jan 2010, 01:46
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IMO that's a valid remark, profit margins have Sales value in denominator, they measure profit/sales relation
27 Feb 2012, 09:52
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\(12000*\frac{9}{8}*\frac{5}{4} = 375*45\)
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
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
Archived Topic
Hi there,
Archived GMAT Club Tests question - no more replies possible.
Where to now? Try our up-to-date Free Adaptive GMAT Club Tests
for the latest questions.
Still interested? Check out the "Best Topics" block above for better discussion and related questions.
Thank you for understanding, and happy exploring!
