The manufacturer’s suggested retail price (MSRP) of a certain item is

Question

The manufacturer’s suggested retail price (MSRP) of a certain item is $60. Store A sells the item for 20 percent more than the MSRP. The regular price of the item at Store B is 30 percent more than the MSRP, but the item is currently on sale for 10 percent less than the regular price. If sales tax is 5 percent of the purchase price at both stores, what is the result when the total cost of the item at Store B is subtracted from the total cost of the item at Store A?

A. $0
B. $0.63
C. $1.80
D. $1.89
E. $2.10

When it said "sales tax", how are we supposed to know whether it's being added or subtracted from the total revenue, seems incomplete, please guide me.

A. $0 
B. $0.63 
C. $1.80 
D. $1.89 
E. $2.10

PareshGmat · Accepted Answer

MSRP = 60

Price at Store A  = 60 * \frac{120}{100} = 72

Price at Store B  = 60 * \frac{130}{100} * \frac{90}{100} = 70.2

Difference = 72.0 - 70.2 = 1.8

Sales tax applicable = 5% on both

= 1.8 + 0.09 = 1.89

Answer = D

Sash143 · Answer

This question is almost same, except for the last part of the question.  Source: ManhattanPrep
The manufacturer’s suggested retail price (MSRP) of a certain item is $60. Store A sells the item for 20 percent more than the MSRP. The regular price of the item at Store B is 30 percent more than the MSRP, but the item is currently on sale for 10 percent less than the regular price.  If sales tax is 5 percent of the purchase price at both stores, how much more will someone pay in sales tax to purchase the item at Store A? 
A) $0
B)$0.09
C)$0.18
D)$0.30
E)$1.80
Please help me understand the last part of the question.

aswaniwait4u · Answer

The last part asks to calculate the difference in sales tax amount i.e  
After basic calculations one can easily find the purchase prices at store A and B.

The purchase price at store A = 72
Sales tax amount at store A = 5% of 72 = 3.60
The purchase price at store B = 70.2
Sales tax amount at store B = 5% of 70.2 = 3.51
5% of purchase price at store A - 5% of purchase price at store B = 3.60-3.51 = 0.09 (Ans)

KarishmaB · Answer

Since everything increases/decreases in percentage terms, another method is to assume price as 100 and then multiply the final answer by 3/5 to adjust for 60.

Store A price = 100 + 20 = 120
Store B price = 100 + 30 - 13 = 117

Difference after incorporating sales tax and adjusting for 60 = 3 * (105/100) ( 3/5) = 189/100 = $1.89

Answer (D)

pallaviisinha · Answer

Hi Bunuel, VeritasprepKarishma,

I did not understand this part of the question: "what is the result when the total cost of the item at Store B is subtracted from the total cost of the item at Store A?" What is the 'total cost' referring to?

abhimahna · Answer

Total cost here is referring to the final price of A and B after applying the sales/taxes.

pallaviisinha · Answer

Thank you, abhimahna. I guess I was confusing it with cost price.

ScottTargetTestPrep · Answer

Solution:

The total cost of the item at store A is 60 x 1.2 x 1.05 = $75.60.

The total cost of the item at store B is 60 x 1.3 x 0.9 x 1.05 = $73.71.

Therefore, the difference is 75.60 - 73.71 = $1.89.

Answer: D

MathRevolution · Answer

(MSRP) of a certain item is $60.

Store A: sells the item for 20 percent more than the MSRP =>  \frac{120}{100}  * 60 = 72

Store B:regular price of the item is 30 percent more than the MSRP =>  \frac{130}{100}  * 60 = 78

=>But Store B: sells the item for 10 percent less than the regular price:  \frac{90}{100}  * 78 = 70.2

Store A - Store B = 72 - 70.2 = 1.8

Sales tax: 5% of the purchase price.

=> 1.8 *  \frac{5}{100}  = 0.09

Total difference: 1.8 + 0.09 = 1.89

Answer D

thetablelamp · Answer

I understood the math I needed to do for this question but how does anyone read the problem and then calculate the arithmetic by hand in less than 2 minutes?

ShreyasJavahar · Answer

Hello  VeritasKarishma ,

I took the "10 percent less than the regular price" to mean that 10 percent of the regular price was subtracted from the marked up price, similar to how one would interpret "5 dollars less than 10". I've seen other questions that require interpreting the "percent less" as a subtraction and not as a multiplier.
Could you please provide some insight into how to ascertain what warrants the subtraction of a percentage of something and what warrants the use of a multiplier?

KarishmaB · Answer

What you did is correct. Multiplier and addition/subtraction are equivalent concepts. Look here:

MSRP is 60. 
Marked up price of store B = 60 + 30% of 60 = 60 + 60*(30/100) = 60 * (1 + 3/10) = 60 * (13/10) = 78

Discounted price = 78 - 10% of 78 = 78 * ( 1 - 10/100) = 78*(9/10) = 70.2

The addition/subtraction leads up to the multiplier by algebraic manipulation. Depending on given data, one of the other method comes out to be easier. 
For example, if I know the multiplication table of 13, I can arrive at 78 directly. If I don't, I know that 10% of 60 is 6 so 30% will be 18 and hence 30% more than 60 will be 78.
Similarly, for discounted price, I know 10% of 78 is 7.8. So subtracting that from 80 gives me 70.2. This is easier than multiplying 78 with 9.

Multipliers are very useful in situations of successive percentage changes with suitable percentages. e.g. if there is an increase of 20% and a decrease of 37.5%, we will multiply by 6/5 and by 5/8 which will give A * (6/5)*(5/8) = A * (3/4) which is simply a decrease of 25% (an easier calculation)

Akash1313 · Answer

Let MP = 60.
Selling price of A = A
Selling price of B = B

Now, A = 1.2*60 = 72
 B = 1.3*60 = 78 but offers 10% off on B, therefore 78*0.9 = 70.2

Finally the sales tax is 5% meaning, the A and B both increase by 5 percent.

New A = 72*1.05
New B = 70.2*1.05

Difference = 1.05*(72-70.2) = 1.05*(1.8) = 1.89 = Ans

ManishaPrepMinds · Answer

Store A: 
• Price = $60 × 1.2 = $72
• With tax = $72 × 1.05 = $75.60
 Store B: 
• Regular = $60 × 1.3 = $78
• Sale price = $78 × 0.9 = $70.20
• With tax = $70.20 × 1.05 = $73.71
 Difference: 
• $75.60 - $73.71 = $1.89
 Answer: D

Prajeesh · Answer

When it said "sales tax", how are we supposed to know whether it's being added or subtracted from the total revenue, seems incomplete, please guide me.

ManishaPrepMinds · Answer

When "sales tax" is mentioned in a problem, it's always  ADDED  to the purchase price/selling price. This is because:
 
Sales tax is a standard business practice where: 
 
Customer pays: Item price + Sales tax 
 
Example: If an item is $100 and tax is 5% 
 
Sales tax = $100 × 5% = $5 
 
Final price = $100 + $5 = $105

Prajeesh · Answer

Cool, I got the difference to be 1.80 and was thinking whether to add or subtract 5% from this. If there were both options, I’d have been definitely confused.

Bunuel · Answer

The sales tax is added to the price. For example, if the price is $100 and the sales tax is 10%, the customer pays $100 + (10% of $100) = $110.

bumpbot · Answer

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The manufacturer’s suggested retail price (MSRP) of a certain item is

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