MathRevolution wrote:

[GMAT math practice question]

If the gross profit of a certain company is 20 percent of the revenue from sales of the company, what percent of the cost is the gross profit?

A. 20%

B. 25%

C. 30%

D. 35%

E. 40%

Method 1: Profit (\(P\)) \(=\) Sales price (\(S\)) \(-\) Cost price (\(C\))

Given, Profit \((P)\) is \(20\)

% of Revenue from sales (ie; sales price) \(= \frac{20}{100}*S = \frac{1}{5}S\)

Substituting value of \(P\) in Profit equation we get;

\(\frac{1}{5}S = S - C\)

\(C = S - \frac{1}{5}S = \frac{5S-1S}{5} = \frac{4}{5}S\)

Required Percentage \(= (\frac{P}{C}) * 100 = (\frac{\frac{1}{5}S}{\frac{4}{5}S}) * 100 = \frac{100}{4} = 25\)

%Method 2: Profit (\(P\)) \(=\) Sales price (\(S\)) \(-\) Cost price (\(C\))

Let \(S = 100\)

Given \(P\) is \(20\)

% of \(S = \frac{20}{100} * 100 = 20\)

\(P = S - C\)

\(20 = 100 - C\)

\(C = 100 - 20 = 80\)

Required percentage \(= (\frac{P}{C}) * 100 = \frac{20}{80} * 100 = \frac{100}{4} = 25\)

%Answer (B)..._________________

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