Retailer’s Profit on Items Ordered

Welcome! You are encouraged to register with the site and login (for free). When you register, you support the site and your question history is saved.

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?

Review: Retailer's Profit on Items Ordered


Explanation

In this question, the retailer's profit or loss as a percentage doesn't hinge on the $30 directly. He ends up selling 80% at 120% of the cost, the question asks us to assume. And he gets 40% of the cost as a refund on the other 20%. So, for the revenue, we can consider the cost 1 and construct a weighted average:







The "cost" is just 1, so the dealer has made a 4% profit. The correct answer is (D).

Note that, the more invested you get in doing calculations with the price of $30, the less likely you are to have chanced across this somewhat faster way of solving the question. No one finds the fastest way to solve a question every time, and you don't need to in order meet and beat your GMAT goal, whatever it is. But you do want to practice eyeing the question with a critical laziness before getting started in the interest of finding the straightest path.

Again, the correct answer is (D).


If you believe you have found an error in this question or explanation, please contact us and include the question title or URL in your message.
Continue »