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Bunuel
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.

Please clarify.
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Bunuel
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.

Please clarify.

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%.

Answer: D.

Hope it's clear.
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Kinshook
Bunuel
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.

Please clarify.

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%.

Answer: D.

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?
Please clarity with reasoning.
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Bunuel
Kinshook
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.

Please clarify.

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%.

Answer: D.

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?
Please clarity with reasoning.

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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Bunuel
Kinshook
Bunuel
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.

Please clarify.

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%.

Answer: D.

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?
Please clarity with reasoning.

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.
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