Last Updated on May 4, 2023
GMAT OFFICIAL GUIDE PS
Solution:
We are given that a dealer ordered 60 cameras to be sold for $250 each. This is a 20% markup over the initial cost to the dealer. We can use this to determine the initial cost to the dealer.
We can let C = dealer’s cost per camera. So,
1.2C = 250
12C = 2,500
C ≈ 210
Thus, we have an approximate cost of $210 per camera.
We are next given that 6 cameras were never sold and were returned to the manufacturer for a refund of 50 percent of the dealers cost. Since the approximate cost was $210 per camera, the dealer received a $105 refund per camera, or $630 total. We can now calculate the total cost of the cameras to the dealer as:
Cost = $210 x 60 – $630
Cost = $12,600 – $630
Cost = $11,970
Next, we need to determine the revenue. We know that the dealer sold 54 cameras for $250 each. So total revenue is:
Revenue = 54 x $250 = $13,500
Since profit = revenue – cost, profit = $13,500 – $11,970 = $1,530
Finally we need to determine the dealer’s approximate profit or loss as a percent of the dealer’s initial cost for the 60 cameras.
(Profit/initial cost) x 100
1,530/12,600 x 100
153/1260 x 100
This is roughly equal to:
150/1200 x 100
15/120 x 100
1/8 x 100 = 12.5% profit
The closest answer is answer choice D, 13% profit.
Answer: D
