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A department store receives a shipment of 1,000 shirts, for

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A department store receives a shipment of 1,000 shirts, for

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A department store receives a shipment of 1,000 shirts, for which it pays $9,000. The store sells the shirts at a price 80 percent above cost for one month, after which it reduces the price of the shirts to 20 percent above cost. The store sells 75 percent of the shirts during the first month and 50 percent of the remaining shirts afterward. How much gross income did sales of the shirts generate?

(A) $10,000
(B) $10,800
(C) $12,150
(D) $13,500
(E) $16,200

OA D

Source: Princeton Review

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Hi All,

We're told that a department store receives a shipment of 1,000 shirts, for which it pays $9,000. The store sells the shirts at a price 80 percent above cost for one month, after which it reduces the price of the shirts to 20 percent above cost. The store sells 75 percent of the shirts during the first month and 50 percent of the REMAINING shirts afterward. We're asked to find the total gross income that the shirts generated. This question includes a lot of details, but it's essentially just about doing the necessary Arithmetic and staying organized.

To start, since we paid $9,000 for 1,000 shirts, the shirts cost $9/each
80% above that cost = (1.8)($9) = $16.20
20% above that cost = (1.2)($9) = $10.80

75% of the shirts = 750 shirts
50% of the REMAINING 250 shirts = 125 shirts

Total revenue = ($16.20)(750) + ($10.80)(125)

The answer choices are sufficiently 'spread out' that we can 'round off' the prices in the above calculation:

Total revenue = ($16)(750) + ($11)(125) =
approx. $12000 + $1375 =
approx. $13,375
There's only one answer that's close...

Final Answer: D

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

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Contact Rich at Rich.C@empowergmat.com

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BTGmoderatorDC wrote:
A department store receives a shipment of 1,000 shirts, for which it pays $9,000. The store sells the shirts at a price 80 percent above cost for one month, after which it reduces the price of the shirts to 20 percent above cost. The store sells 75 percent of the shirts during the first month and 50 percent of the remaining shirts afterward. How much gross income did sales of the shirts generate?

(A) $10,000
(B) $10,800
(C) $12,150
(D) $13,500
(E) $16,200

OA D

Source: Princeton Review
Cost of per shirt = 9000/1000 = $9;
Price of a shirt in the first month = 9*(100 + 80)% = 9*1.8;
Price of a shirt in subsequent months = 9*(100 + 20)% = 9*1.2;
Number of shirts sold in the first month = 75% of 1000 = 750;
Number of remaining shirts = 1000 - 750 = 250;
Number of shirts sold in the subsequent months = 50% of 250 = 125

Gross income the sales of the shirts generated = Gross income in the first month + Gross income in the subsequent months
= 750*(9*1.8) + 125*(9*1.2)
= 125*9[6*1.8 + 1.2]
= 125*9[10.8 + 1.2]
= 125*9*12
= $13,500.

The correct answer: D

Hope this helps!

-Jay
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0.75*1000 ------ 75% of 1000
0.25*1000*0.5 ------ half of the remaining 25% of 1000
9 ----- price of each t-shirt
1.8 ----- 80 percent above cost
1.2 ----- 20 percent above cost

gross income = 0.75*1000*9*1.8 + 0.25*1000*0.5*1.2*9 = 12150 + 1350 = 13500

Hence option D is the correct answer.

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BTGmoderatorDC wrote:
A department store receives a shipment of 1,000 shirts, for which it pays $9,000. The store sells the shirts at a price 80 percent above cost for one month, after which it reduces the price of the shirts to 20 percent above cost. The store sells 75 percent of the shirts during the first month and 50 percent of the remaining shirts afterward. How much gross income did sales of the shirts generate?

(A) $10,000
(B) $10,800
(C) $12,150
(D) $13,500
(E) $16,200

OA D

Source: Princeton Review
We are given that a department store receives a shipment of 1,000 shirts, for which it pays $9,000. Thus, the cost per shirt is 9 dollars.

Since the store sells the shirts at a price 80 percent above cost for one month, the selling price for that month is 1.8 x 9 = $16.20. Since 75 percent of the shirts, or 0.75 x 1,000 = 750 shirts, are sold during this month, the revenue earned is 750 x 16.2 = $12,150.

After that month, 50% of the remaining shirts, or 0.5 x 250 = 125 shirts, are sold at a cost of 1.2 x 9 = $10.80. The revenue earned from the sale of these shirts is 125 x 10.8 = $1,350.

Thus, the gross income earned was $12,150 + $1,350 = $13,500.

Answer: D

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Scott Woodbury-Stewart Founder and CEO

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