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## gross profit on a computer game

This topic has 2 expert replies and 4 member replies
ska7945 Master | Next Rank: 500 Posts
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#### gross profit on a computer game

Mon Sep 08, 2008 5:20 pm
A toy store's gross profit on a computer game was 10 percent of the cost of the game. If the store increased the selling price of the game from $44 to$46 and the cost of the game remained the same, then the store's gross profit on the game after the price increase was what percent of the cost of the game?

A. 10.5%
B. 11%
C. 12.5%
D. 13%
E. 15%

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just_do_it Senior | Next Rank: 100 Posts
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Mon Sep 08, 2008 5:57 pm
IMO E
consider the following

CP x x
SP 44 46
profit 44-x 46-x
according to the question stem, 44-x = 10% of x
which implies x =40

we need to find out gross profit after price increase was what % of CP
i.e
(46-x) = k% of x
putting x = 40
we get k =15% (option E)

what is the OA?

cramya Legendary Member
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Mon Sep 08, 2008 6:41 pm
I think its A)

I took the gross profit of 4.6 (10%of 46) % 44(used it since it says cost of the game remained the same) * 100 ~= 10.5 %.

cramya Legendary Member
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Mon Sep 08, 2008 6:55 pm
Pondering over some more I think Just do it is right.

E) 15% is right. Good Job Just do it!!

ska7945 Master | Next Rank: 500 Posts
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Mon Sep 08, 2008 7:36 pm
oa e

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### GMAT/MBA Expert

Scott@TargetTestPrep GMAT Instructor
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Tue Dec 05, 2017 6:37 pm
ska7945 wrote:
A toy storeï¿½s gross profit on a computer game was 10 percent of the cost of the game. If the store increased the selling price of the game from $44 to$46 and the cost of the game remained the same, then the storeï¿½s gross profit on the game after the price increase was what percent of the cost of the game?

A. 10.5%
B. 11%
C. 12.5%
D. 13%
E. 15%
We are given that a toy storeâ€™s gross profit on a computer game was 10 percent of the cost of the game. Since we know that revenue - cost = profit and we are given that profit = 0.1 x cost, we can create the following equation, in which r = revenue and c = cost:

r - c = 0.1c

r = 1.1c

Since the original selling price (or revenue) was $44, we can substitute 44 for r in the equation r = 1.1c and determine c. 44 = 1.1c 440 = 11c 40 = c If the price was increased to$46, the new profit would be 46 - 40 = $6. Finally we can determine what percent the profit was of the cost. (profit/cost) x 100% (6/40) x 100% (3/20) x 100% 15% Answer: E _________________ Scott Woodbury-Stewart Founder and CEO ### GMAT/MBA Expert Rich.C@EMPOWERgmat.com Elite Legendary Member Joined 23 Jun 2013 Posted: 9436 messages Followed by: 480 members Upvotes: 2867 GMAT Score: 800 Wed Dec 06, 2017 10:32 am Hi All, We're told that a toy store's gross profit on a computer game was 10 percent of the cost of the game and the store increased the selling price of the game from$44 to $46 and the cost of the game remained the same. We're asked to find the store's gross profit on the game after the price increase as a percent of the cost of the game. The answer choices to this question are 'spread out' enough that we can use a bit of logic (and a little math) to get to the correct answer. Since the initial selling price of the game is$44 - and that represents a 10% PROFIT - we know that the COST of the game is LESS than $44. Thus, raising the sell price by$2 will increase the profit by $2.$2/$44 = 1/22 = about 5% - and since we know that the COST was less than$44, 1/22 would be 'rounding down' (the actual fraction is likely closer to 1/20). Thus, the INCREASE in profit (as a percent of cost) is almost certainly around 5%. There's only one answer that's that much greater than the initial 10% profit we started with...

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