A furniture store owner decided to drop the price of her recliners by

Question

A furniture store owner decided to drop the price of her recliners by 20% to spur business. By the end of the week she had sold 50% more recliners. What is the percentage increase of the gross?

A. 10%
B. 15%
C. 20%
D. 25%
E. 50%

deepthiraghav · Answer

Say a recliner is actually worth $100
If she sells 100 recliners then she earns $10000
After the discount of 20%, she will earn $80 per recliner and she sells 50% more ie.,150 recliners
Hence her sales tields 150*80=$12000
Increase in sales=12000-10000=$2000
So% increase = 2000*100/10000 =20%
C is the answer

GMATinsight · Answer

Let, 
No. of Recliners = 100 Price per recliner = $100 i.e. Total Revenue = 100*100 = $10,000

Discounted Price of recliners = 100-20 = $80

Sold Recliners in a week now = 150 i.e. Revenue earned = 150*80 = $12,000

Gross Increase = 12000-10000 = 2000

% increase = (2000/10000)*100 = 20%

Answer: Option C

davedekoos · Answer

This question can also be done without picking numbers, and knowing how to approach it both ways will help you on test day if you run into a question where picking numbers isn't so straightforward or leads to messy calculations.

Gross (sales revenue) = units sold * selling price = Q*P
We are told that the selling price is decreased by 20% --> new selling price = (1-0.2)P = 0.8P
We are told that the quantity sold increases by 50% --> new quantity sold = 1.5Q
New Gross = 1.5Q*0.8P = 1.2QP

With the New Gross = 1.2QP, you should be able to see that the increase in the Gross is 20%

Answer C

If you want to check to make sure your brain isn't doing funny things, a quick calculation for the % increase can be done

Percent increase in the Gross =  \frac{New Gross - Old Gross}{Old Gross}

= \frac{(1.2QP-QP)}{QP} = 0.2 = 20 %

TeamGMATIFY · Answer

Assume the price of each recliner = 100 and Total recliners sold = 100
Total income = 100*100

After the discount, 
Price of each recliner = 80
Number of recliners sold = 150
New total income = 80*150 = 12000

Percentage increase = \frac{{new - old}}{{old}} * 100

Percentage increase = \frac{{(12000 - 10000)}}{10000}  *100 = (2000/10000) * 100 = 20%
Option C

bumpbot · Answer

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