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m07 q33

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m07 q33 [#permalink]

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New post 08 Sep 2008, 11:39
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A shop purchased a pair of sunglasses for $120 and was selling it at a price that equaled the purchase price of the sunglasses plus a markup that was 25 percent of the selling price. After some time a shop owner decided to decrease the selling price by 20 percent. What was the shop's gross profit on this sale?

A. $0
B. $2
C. $4
D. $6
E. $8

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New post 23 Nov 2012, 06:21
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mbafwi wrote:
If a company sells \(S\) tons (1 ton = 1000 kilograms) of product A annually and charges \(B\) dollars per ton, what is the profit if it costs \(G\) dollars to manufacture a kilogram of product A and \(P\) dollars to ship it to the customer?

(A) \(b-1000g+1000p\)
(B) \(bs-\frac{g+p}{1000}\)
(C) \((b-(g+p))*s\)
(D) \(\left(\frac{g}{1000}-(b+p)\right)*s\)
(E) \(\left(\frac{b}{1000}-(g+p)\right)*1000s\)

[Reveal] Spoiler: OA
E

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My Question: I believe this solution is wrong. The final answer has units of $/kg inside the parenthesis, multiplied by S which is in tons. If somebody sees something I don't, let me know. Also, the explanation is confusing since they say use $5/kg as B, but then divide B by 1000 in the final equation (which converts /ton to /kg). Another thing is the question doesn't say if the shipping cost is per ton or per kg. Overall, this is a confusing question, confusing enough to have a wrong answer, so should probably be thrown away or reworded.


This question was replaced by the following one:

A shop purchased a pair of sunglasses for $120 and was selling it at a price that equaled the purchase price of the sunglasses plus a markup that was 25 percent of the selling price. After some time a shop owner decided to decrease the selling price by 20 percent. What was the shop's gross profit on this sale?

A. $0
B. $2
C. $4
D. $6
E. $8

Let the markup be \($x\), so \(x\) must be 25% of the selling price, which would be \(120+x\): \(x=0.25(120+x)\) --> \(x=40\). Hence the selling price was \(120+40=160\).

The price after the discount of 20% would be \(160*0.8=128\) --> gross profit on the sale: final selling price - cost of the sunglasses = \($128 - $120 = $8\).

Answer: E.
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New post 19 Nov 2013, 06:44
Can you explain why it's not 1.25*120=150? I am confused on how you got to 160 from 120 if the markup is 25%.

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Re: m07 q33 [#permalink]

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New post 19 Nov 2013, 12:26
A shop purchased a pair of sunglasses for $120 and was selling it at a price that equaled the purchase price of the sunglasses plus a markup that was 25 percent of the selling price. After some time a shop owner decided to decrease the selling price by 20 percent. What was the shop's gross profit on this sale?

I did it slightly different than Bunuel but the concept is the same.

Let x = selling price

x = 120 + .25(x)
.75x = 120
x = $160 = selling price

.80 x $160 = 128 = discounted selling price

128 - 120 = $8

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New post 19 Nov 2013, 14:16
Purchase Price+ 0.25*Selling Price= Selling Price
Selling Price = 120/.75 = 160
New Selling Price after 20% decrease= 120*.8=128
Profit: New Selling Price-Purchase Price: 120-120= 8

Answer (E)

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Re: m07 q33 [#permalink]

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New post 20 Nov 2013, 09:52
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One of my duties at work is to set prices for retailers, so this may help some people:

When including a markup for the retailer, you want the markup INCLUDED in the price. Your goal thus becomes "what does my price need to be so that 25% of the final price will be profit?

The general formula: Retail Price = Purchase Price / 1-Desired Markup



For example:

If Bob bough a pair of pants for $100 and wanted to make 25% on his investment, he would simply multiply 100*1.25 for a figure of $125. Bob makes $25. However, the % of the sale which Bob puts in his pocket is $25/$125=20%

If Bob bought a pair of pants for $100, and wanted 25% of the the SALE price to go into his pocket, he would divide the desired percentage into the price, therefore $100/(1-0.25) = $100/0.75 = $133.33. Notice that Bob is now making $33.33. $33.33/$133.33 = 25% Therefore, 25% of the sale price was profit for Bob.


I hope this helps.

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New post 28 Nov 2013, 02:36
Can anyone provide the solution for the first question. I am not able to solve it.

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New post 28 Nov 2013, 02:59

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New post 28 Nov 2013, 18:33
While I understand Bunuel's explanation, isn't the question a little ambiguous when it says decrease the SP by 20%- I mean it hasn't clarified whether its talking about the SP inclusive of Mark Up or the original SP?





mbafwi wrote:
A shop purchased a pair of sunglasses for $120 and was selling it at a price that equaled the purchase price of the sunglasses plus a markup that was 25 percent of the selling price. After some time a shop owner decided to decrease the selling price by 20 percent. What was the shop's gross profit on this sale?

A. $0
B. $2
C. $4
D. $6
E. $8

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Kudos [?]: [0], given: 7

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New post 29 Nov 2013, 02:35
Shibs wrote:
While I understand Bunuel's explanation, isn't the question a little ambiguous when it says decrease the SP by 20%- I mean it hasn't clarified whether its talking about the SP inclusive of Mark Up or the original SP?





mbafwi wrote:
A shop purchased a pair of sunglasses for $120 and was selling it at a price that equaled the purchase price of the sunglasses plus a markup that was 25 percent of the selling price. After some time a shop owner decided to decrease the selling price by 20 percent. What was the shop's gross profit on this sale?

A. $0
B. $2
C. $4
D. $6
E. $8

Source: GMAT Club Tests - hardest GMAT questions


The mark up is included in selling price.
_________________

New to the Math Forum?
Please read this: Ultimate GMAT Quantitative Megathread | All You Need for Quant | PLEASE READ AND FOLLOW: 12 Rules for Posting!!!

Resources:
GMAT Math Book | Triangles | Polygons | Coordinate Geometry | Factorials | Circles | Number Theory | Remainders; 8. Overlapping Sets | PDF of Math Book; 10. Remainders | GMAT Prep Software Analysis | SEVEN SAMURAI OF 2012 (BEST DISCUSSIONS) | Tricky questions from previous years.

Collection of Questions:
PS: 1. Tough and Tricky questions; 2. Hard questions; 3. Hard questions part 2; 4. Standard deviation; 5. Tough Problem Solving Questions With Solutions; 6. Probability and Combinations Questions With Solutions; 7 Tough and tricky exponents and roots questions; 8 12 Easy Pieces (or not?); 9 Bakers' Dozen; 10 Algebra set. ,11 Mixed Questions, 12 Fresh Meat

DS: 1. DS tough questions; 2. DS tough questions part 2; 3. DS tough questions part 3; 4. DS Standard deviation; 5. Inequalities; 6. 700+ GMAT Data Sufficiency Questions With Explanations; 7 Tough and tricky exponents and roots questions; 8 The Discreet Charm of the DS; 9 Devil's Dozen!!!; 10 Number Properties set., 11 New DS set.


What are GMAT Club Tests?
Extra-hard Quant Tests with Brilliant Analytics

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Re: m07 q33   [#permalink] 29 Nov 2013, 02:35
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