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# Items are sold by a retailer for a price of \$30 each, which represents

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Math Expert
Joined: 02 Sep 2009
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Items are sold by a retailer for a price of \$30 each, which represents  [#permalink]

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21 Aug 2019, 02:00
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Difficulty:

35% (medium)

Question Stats:

70% (03:12) correct 30% (02:50) wrong based on 30 sessions

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Items are sold by a retailer for a price of \$30 each, which represents a 20 percent markup over the cost paid by the retailer for each item. Of 50 items ordered, 30 are sold, and 10 are returned to the manufacturer for a refund of 40 percent of the dealer's initial cost. If the remaining inventory is sold, what is the retailer's approximate profit or loss as a percent of the retailer's initial cost for the 50 items?

A. 8% loss
B. 4% loss
C. 8% profit
D. 4% profit
E. 12% profit

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Items are sold by a retailer for a price of \$30 each, which represents  [#permalink]

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Updated on: 21 Aug 2019, 06:18
Bunuel wrote:
Items are sold by a retailer for a price of \$30 each, which represents a 20 percent markup over the cost paid by the retailer for each item. Of 50 items ordered, 30 are sold, and 10 are returned to the manufacturer for a refund of 40 percent of the dealer's initial cost. If the remaining inventory is sold, what is the retailer's approximate profit or loss as a percent of the retailer's initial cost for the 50 items?

A. 8% loss
B. 4% loss
C. 8% profit
D. 4% profit
E. 12% profit

SP of item ; 30\$
and CP of item ; 30/1.2 ; 25\$ of 50 items; 1250\$
SP of 40 items; 40*12 ;\$ 1200
refund is @ .4*25 ; 10\$ * 10 items; 100 \$ which is added to 1200 ; 1300 \$
so net ∆ ; 1300-1250/1250 ; ~4% profit
IMO D
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Originally posted by Archit3110 on 21 Aug 2019, 02:13.
Last edited by Archit3110 on 21 Aug 2019, 06:18, edited 1 time in total.
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Items are sold by a retailer for a price of \$30 each, which represents  [#permalink]

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Updated on: 21 Aug 2019, 03:57
Bunuel wrote:
Items are sold by a retailer for a price of \$30 each, which represents a 20 percent markup over the cost paid by the retailer for each item. Of 50 items ordered, 30 are sold, and 10 are returned to the manufacturer for a refund of 40 percent of the dealer's initial cost. If the remaining inventory is sold, what is the retailer's approximate profit or loss as a percent of the retailer's initial cost for the 50 items?

A. 8% loss
B. 4% loss
C. 8% profit
D. 4% profit
E. 12% profit

Given:
1. Items are sold by a retailer for a price of \$30 each, which represents a 20 percent markup over the cost paid by the retailer for each item.
2. Of 50 items ordered, 30 are sold, and 10 are returned to the manufacturer for a refund of 40 percent of the dealer's initial cost.
3. The remaining inventory is sold

Asked: What is the retailer's approximate profit or loss as a percent of the retailer's initial cost for the 50 items?

1. Items are sold by a retailer for a price of \$30 each, which represents a 20 percent markup over the cost paid by the retailer for each item.
Cost price of each item = \$30/1.2 = 25
Total cost price of 50 items = 50 * \$25 = \$1250

2. Of 50 items ordered, 30 are sold, and 10 are returned to the manufacturer for a refund of 40 percent of the dealer's initial cost (40%*25=\$10).
3. The remaining inventory is sold
Total Sales = 30 * \$30 +10* \$10 + 10 *\$30 = \$1300
Total profit = Total sales - Total Costs = \$1300 - \$1250 = \$50

The retailer's approximate profit or loss as a percent of the retailer's initial cost for the 50 items = \$50/(50*25) = (5000/1250)% = 4%

IMO D
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Originally posted by Kinshook on 21 Aug 2019, 03:06.
Last edited by Kinshook on 21 Aug 2019, 03:57, edited 2 times in total.
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Re: Items are sold by a retailer for a price of \$30 each, which represents  [#permalink]

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21 Aug 2019, 03:16
Bunuel wrote:
Items are sold by a retailer for a price of \$30 each, which represents a 20 percent markup over the cost paid by the retailer for each item. Of 50 items ordered, 30 are sold, and 10 are returned to the manufacturer for a refund of 40 percent of the dealer's initial cost. If the remaining inventory is sold, what is the retailer's approximate profit or loss as a percent of the retailer's initial cost for the 50 items?

A. 8% loss
B. 4% loss
C. 8% profit
D. 4% profit
E. 12% profit

Bunuel Will these 10 items returned for refund be treated as defective?

There are 2 options: -
1. Returned items are OK and can be resold in remaining inventory. Reason for return may be wrong order placed.
2. Returned items are NOT OK and are needed to be scrapped. Total loss for the retailer.

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Please provide kudos if you like my post. Kudos encourage active discussions.

My GMAT Resources: -

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E-mail : kinshook.chaturvedi@gmail.com
Math Expert
Joined: 02 Sep 2009
Posts: 57996
Re: Items are sold by a retailer for a price of \$30 each, which represents  [#permalink]

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21 Aug 2019, 03:35
Kinshook wrote:
Bunuel wrote:
Items are sold by a retailer for a price of \$30 each, which represents a 20 percent markup over the cost paid by the retailer for each item. Of 50 items ordered, 30 are sold, and 10 are returned to the manufacturer for a refund of 40 percent of the dealer's initial cost. If the remaining inventory is sold, what is the retailer's approximate profit or loss as a percent of the retailer's initial cost for the 50 items?

A. 8% loss
B. 4% loss
C. 8% profit
D. 4% profit
E. 12% profit

Bunuel Will these 10 items returned for refund be treated as defective?

There are 2 options: -
1. Returned items are OK and can be resold in remaining inventory. Reason for return may be wrong order placed.
2. Returned items are NOT OK and are needed to be scrapped. Total loss for the retailer.

I think here is what the question means.

Price of an item = \$30.
Cost of an item = \$25.

The retailer's initial cost for 50 items = 50*\$25 = \$1,250.

The retailer's cash inflow:
40 items sold for \$30 = \$1,200.
10 items returned to the the manufacturer for a refund of 40 percent of the dealer's initial cost, which would be 0.4*\$25 = \$10, so total refund = 10*\$10 = \$100.
Total = \$1,200 + \$100 = \$1,300.

Profit = \$1,300 - \$1,250 = \$50

As a percent of the cost = 50/1250 = 0.04 = 4%.

Hope it's clear.
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Items are sold by a retailer for a price of \$30 each, which represents  [#permalink]

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21 Aug 2019, 03:59
Bunuel wrote:
Kinshook wrote:
Bunuel wrote:
Items are sold by a retailer for a price of \$30 each, which represents a 20 percent markup over the cost paid by the retailer for each item. Of 50 items ordered, 30 are sold, and 10 are returned to the manufacturer for a refund of 40 percent of the dealer's initial cost. If the remaining inventory is sold, what is the retailer's approximate profit or loss as a percent of the retailer's initial cost for the 50 items?

A. 8% loss
B. 4% loss
C. 8% profit
D. 4% profit
E. 12% profit

Bunuel Will these 10 items returned for refund be treated as defective?

There are 2 options: -
1. Returned items are OK and can be resold in remaining inventory. Reason for return may be wrong order placed.
2. Returned items are NOT OK and are needed to be scrapped. Total loss for the retailer.

I think here is what the question means.

Price of an item = \$30.
Cost of an item = \$25.

The retailer's initial cost for 50 items = 50*\$25 = \$1,250.

The retailer's cash inflow:
40 items sold for \$30 = \$1,200.
10 items returned to the the manufacturer for a refund of 40 percent of the dealer's initial cost, which would be 0.4*\$25 = \$10, so total refund = 10*\$10 = \$100.
Total = \$1,200 + \$100 = \$1,300.

Profit = \$1,300 - \$1,250 = \$50

As a percent of the cost = 50/1250 = 0.04 = 4%.

Hope it's clear.

Bunuel
Should the refund for returned items be included in Sales or in Costs?
If refund is to be included in sales, then should it be a positive or negative entry?
Will retailer receive refund or provide refund?
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Math Expert
Joined: 02 Sep 2009
Posts: 57996
Re: Items are sold by a retailer for a price of \$30 each, which represents  [#permalink]

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21 Aug 2019, 04:06
Kinshook wrote:
Bunuel wrote:
Kinshook wrote:
Items are sold by a retailer for a price of \$30 each, which represents a 20 percent markup over the cost paid by the retailer for each item. Of 50 items ordered, 30 are sold, and 10 are returned to the manufacturer for a refund of 40 percent of the dealer's initial cost. If the remaining inventory is sold, what is the retailer's approximate profit or loss as a percent of the retailer's initial cost for the 50 items?

A. 8% loss
B. 4% loss
C. 8% profit
D. 4% profit
E. 12% profit

Bunuel Will these 10 items returned for refund be treated as defective?

There are 2 options: -
1. Returned items are OK and can be resold in remaining inventory. Reason for return may be wrong order placed.
2. Returned items are NOT OK and are needed to be scrapped. Total loss for the retailer.

I think here is what the question means.

Price of an item = \$30.
Cost of an item = \$25.

The retailer's initial cost for 50 items = 50*\$25 = \$1,250.

The retailer's cash inflow:
40 items sold for \$30 = \$1,200.
10 items returned to the the manufacturer for a refund of 40 percent of the dealer's initial cost, which would be 0.4*\$25 = \$10, so total refund = 10*\$10 = \$100.
Total = \$1,200 + \$100 = \$1,300.

Profit = \$1,300 - \$1,250 = \$50

As a percent of the cost = 50/1250 = 0.04 = 4%.

Hope it's clear.

Bunuel
Should the refund for returned items be included in Sales or in Costs?
If refund is to be included in sales, then should it be a positive or negative entry?
Will retailer receive refund or provide refund?

Consider those 10 items returned to the manufacture as sold back to them for \$10. So, manufacturer paid (refunded) \$100 to the retailer.
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Joined: 03 Jun 2019
Posts: 1500
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Re: Items are sold by a retailer for a price of \$30 each, which represents  [#permalink]

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21 Aug 2019, 04:12
Bunuel wrote:
Kinshook wrote:
Bunuel wrote:
Items are sold by a retailer for a price of \$30 each, which represents a 20 percent markup over the cost paid by the retailer for each item. Of 50 items ordered, 30 are sold, and 10 are returned to the manufacturer for a refund of 40 percent of the dealer's initial cost. If the remaining inventory is sold, what is the retailer's approximate profit or loss as a percent of the retailer's initial cost for the 50 items?

A. 8% loss
B. 4% loss
C. 8% profit
D. 4% profit
E. 12% profit

Bunuel Will these 10 items returned for refund be treated as defective?

There are 2 options: -
1. Returned items are OK and can be resold in remaining inventory. Reason for return may be wrong order placed.
2. Returned items are NOT OK and are needed to be scrapped. Total loss for the retailer.

I think here is what the question means.

Price of an item = \$30.
Cost of an item = \$25.

The retailer's initial cost for 50 items = 50*\$25 = \$1,250.

The retailer's cash inflow:
40 items sold for \$30 = \$1,200.
10 items returned to the the manufacturer for a refund of 40 percent of the dealer's initial cost, which would be 0.4*\$25 = \$10, so total refund = 10*\$10 = \$100.
Total = \$1,200 + \$100 = \$1,300.

Profit = \$1,300 - \$1,250 = \$50

As a percent of the cost = 50/1250 = 0.04 = 4%.

Hope it's clear.

Bunuel
Should the refund for returned items be included in Sales or in Costs?
If refund is to be included in sales, then should it be a positive or negative entry?
Will retailer receive refund or provide refund?

Consider those 10 items returned to the manufacture as sold back to them for \$10. So, manufacturer paid (refunded) \$100 to the retailer.

Thanks Bunuel
Now it is clear.
_________________
"Success is not final; failure is not fatal: It is the courage to continue that counts."

Please provide kudos if you like my post. Kudos encourage active discussions.

My GMAT Resources: -

Efficient Learning
All you need to know about GMAT quant

Tele: +91-11-40396815
Mobile : +91-9910661622
E-mail : kinshook.chaturvedi@gmail.com
Re: Items are sold by a retailer for a price of \$30 each, which represents   [#permalink] 21 Aug 2019, 04:12
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