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A dealer sells 36 Model A tablets out of 40 Model

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by sachin_yadav » Tue Mar 08, 2016 9:46 am
A dealer sells 36 Model A tablets out of 40 Model A tablets at a price of $300 each; markup is 20% over the cost per tablet for the dealer. The tablets, which were not sold, were returned to the manufacturer for a refund of 60% of the dealer's cost. The overall profit/loss for the dealer for the 40 tablets is closest to?

A. 13% loss
B. 20% loss
C. 5% profit
D. 14% profit
E. 20% profit

OA is D
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by [email protected] » Tue Mar 08, 2016 10:33 am
Hi sachin_yadav,

What is the source of this question? I ask because it's a 'lift' of an OG question:

GMAT2016: page 180, Q195
OG13/GMAT2015: page 178, Q182

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by sachin_yadav » Wed Mar 09, 2016 7:09 am
[email protected] wrote:Hi sachin_yadav,

What is the source of this question? I ask because it's a 'lift' of an OG question:

GMAT2016: page 180, Q195
OG13/GMAT2015: page 178, Q182

GMAT assassins aren't born, they're made,
Rich
Thanks Rich,

I will check OG. However, the source is "e-gmat"

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by Prazna88 » Wed Mar 09, 2016 10:59 am
Is the answer 14% profit?
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by DavidG@VeritasPrep » Wed Mar 09, 2016 11:22 am
sachin_yadav wrote:A dealer sells 36 Model A tablets out of 40 Model A tablets at a price of $300 each; markup is 20% over the cost per tablet for the dealer. The tablets, which were not sold, were returned to the manufacturer for a refund of 60% of the dealer's cost. The overall profit/loss for the dealer for the 40 tablets is closest to?

A. 13% loss
B. 20% loss
C. 5% profit
D. 14% profit
E. 20% profit

OA is D
If 300 represents a 20% markup over cost, and we designate the cost as 'c,' we can write: 300 = 1.2c, or c = 300/1.2 = 3000/12 = 250. So the sale price was 300 and the cost was 250.

Total Revenue: For the 36 items sold: 300*36. Total revenue for the 4 unsold items (if they received 60% or 3/5 of the cost back) = 4 * 3/5 * 250 = 600
Total overall revenue = 300*36 + 600 = 11,400

Total Cost: 40 * 250 = 10,000

Profit = 11,400 - 10,000 = 1400.

1400/10,000 = 14%. Answer is D
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by DavidG@VeritasPrep » Wed Mar 09, 2016 11:24 am
sachin_yadav wrote:A dealer sells 36 Model A tablets out of 40 Model A tablets at a price of $300 each; markup is 20% over the cost per tablet for the dealer. The tablets, which were not sold, were returned to the manufacturer for a refund of 60% of the dealer's cost. The overall profit/loss for the dealer for the 40 tablets is closest to?

A. 13% loss
B. 20% loss
C. 5% profit
D. 14% profit
E. 20% profit

OA is D
You could also use a little common sense. If there were no returns, there'd be a 20% profit, right? (The markup is 20%.) There's no way 4 returns (with 60% refund, no less) are going to drop the profit from 20% to 5%! So the only viable option is D
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by GMATGuruNY » Wed Mar 09, 2016 11:51 am
sachin_yadav wrote:A dealer sells 36 Model A tablets out of 40 Model A tablets at a price of $300 each; markup is 20% over the cost per tablet for the dealer. The tablets, which were not sold, were returned to the manufacturer for a refund of 60% of the dealer's cost. The overall profit/loss for the dealer for the 40 tablets is closest to?

A. 13% loss
B. 20% loss
C. 5% profit
D. 14% profit
E. 20% profit
36 tablets earn a profit of 20%, while 4 tablets suffer a loss of 40%.
Average profit for all 40 tablets = (36*20 - 4*40)/40 = (720 - 160)/40 = 560/40 = 14.

The correct answer is D.
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by DavidG@VeritasPrep » Wed Mar 09, 2016 12:25 pm
GMATGuruNY wrote:
sachin_yadav wrote:A dealer sells 36 Model A tablets out of 40 Model A tablets at a price of $300 each; markup is 20% over the cost per tablet for the dealer. The tablets, which were not sold, were returned to the manufacturer for a refund of 60% of the dealer's cost. The overall profit/loss for the dealer for the 40 tablets is closest to?

A. 13% loss
B. 20% loss
C. 5% profit
D. 14% profit
E. 20% profit
36 tablets earn a profit of 20%, while 4 tablets suffer a loss of 40%.
Average profit for all 40 tablets = (36*20 - 4*40)/40 = (720 - 160)/40 = 560/40 = 14.

The correct answer is D.
Nice, Mitch.

And if we're thinking about this question in terms of a weighted average, we could also do a little fun alligation. If 36 were sold and 4 were returned, the ratio of sold/returned is 36/4 or 9/1. The return on the 36 sold was +20% and the return on the 4 returned was -40%. We know that there were 9 times as many tablets earning a 20% return as were earning a -40% return, so -40 is 9x from the overall average and +20 is x away from the overall average.

(-40)------------------9x------overall_average----x---(20)

Gap from -40 to 20 = 60. So 9x + x = 60. x = 6.
20 - 6 = 14.
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by Matt@VeritasPrep » Thu Mar 17, 2016 9:30 pm
Let's say the dealer's cost per tablet is c. The dealer's total cost is 40c. His profit/loss is 36*(.2c) - 4*(.4c), or 5.6c. That gives us a profit/total ratio of 5.6c/40c, or 14/100. (To find that, just multiply the top and the bottom by 2.5.)
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