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How should my approach be to these kind of problems?

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by golu23 » Tue Jan 17, 2012 12:00 am
A furniture dealer purchased a desk@$150 and set the selling price equal to purchase price plus a markup that was 40% of the selling price.If the dealer sold the desk at selling price what was the ampunt of dealer's gross profit from the purchase and sale of the desk?
a.40 b.60 c.80 d.90 e.100
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by Anurag@Gurome » Tue Jan 17, 2012 12:08 am
golu23 wrote:A furniture dealer purchased a desk@$150 and set the selling price equal to purchase price plus a markup that was 40% of the selling price.If the dealer sold the desk at selling price what was the ampunt of dealer's gross profit from the purchase and sale of the desk?
a.40 b.60 c.80 d.90 e.100
Purchase price = $150
Say, selling price = S

According to question, S = 150 + 40% of S = 150 + (0.4)*S
=> (S - 0.4S) = 150
=> 0.6S = 150
=> S = 150/0.6 = 250

Gross profit = Selling Price - Purchase Price = $250 - $150 = [spoiler]$100[/spoiler]

The correct answer is E.
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by pappueshwar » Tue Jan 17, 2012 8:41 am
if the cost price is $ 150 then SP would also be $150 , markup up of 40 % on SP makes final amount as $210 ( 150 plus 40% of 150).
then the profit from the transaction is 210 - 150 = $ 60.

where am i going wrong ? please assist. this is how i did the problem.
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by jayoptimist » Wed Jan 18, 2012 3:29 am
Approach is very simple.

PP (Purchase price) = 150
Let, Selling Price SP = X
Mark up on SP = 40%

So we have an equation here,

PP + Mark up on SP = SP
150+ (40/100)*X = X
Solving for X, we have X = 250

PP= 150
SP= 250
Gross Profit = 250-150 = 100.
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by GMATGuruNY » Wed Jan 18, 2012 8:42 am
golu23 wrote:A furniture dealer purchased a desk@$150 and set the selling price equal to purchase price plus a markup that was 40% of the selling price.If the dealer sold the desk at selling price what was the ampunt of dealer's gross profit from the purchase and sale of the desk?
a.40 b.60 c.80 d.90 e.100
Another approach: plug in the answers, which represent the profit.
When the current answer choice is plugged in, the profit must be equal to the markup.
To be efficient, we should start with C, the middle answer choice.
If C is incorrect, we'll know whether the correct answer must be smaller or greater.

Answer choice C: profit = 80.
Selling price = profit + purchase price = 80+150 = 230.
Markup = 40% of the selling price = .4(230) = 92.
The profit is too small.
Eliminate A, B and C.

Answer choice D: profit = 90.
Selling price = profit + purchase price = 90+150 = 240.
Markup = 40% of the selling price = .4(240) = 96.
The profit is too small.
Eliminate D.

The correct answer is E.

Note that we had to try only 2 answer choices, an efficient way to determine the correct answer.

Answer choice E: profit = 100.
Selling price = profit + purchase price = 100+150 = 250.
Markup = 40% of the selling price = .4(250) = 100.
Profit = markup = 100. Success!
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