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A certain rnanufacturer increased its gross profit

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by darlingriyarai » Tue Nov 27, 2012 2:13 am
A certain rnanufacturer increased its gross profit on a product from 10 percent of the cost of the product to 15 percent of the cost by changing the selling price. If the new selling price was $92.00 and the cost of the product remained the same, what was the old selling price?

A. $77.40
B. $80.00
C. $83.64
D. $87.40
E. $88.00
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by nisagl750 » Tue Nov 27, 2012 8:30 am
darlingriyarai wrote:A certain rnanufacturer increased its gross profit on a product from 10 percent of the cost of the product to 15 percent of the cost by changing the selling price. If the new selling price was $92.00 and the cost of the product remained the same, what was the old selling price?

A. $77.40
B. $80.00
C. $83.64
D. $87.40
E. $88.00
Let Original Cost price be $100
So for profit to be 10%, S.P = 110
And for profit of 15%, S.P = 115

Given, new S.P = 92

Comparing the two we get

C.P/92 = 100/115

Ans B
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by GMATGuruNY » Tue Nov 27, 2012 10:13 am
darlingriyarai wrote:A certain rnanufacturer increased its gross profit on a product from 10 percent of the cost of the product to 15 percent of the cost by changing the selling price. If the new selling price was $92.00 and the cost of the product remained the same, what was the old selling price?

A. $77.40
B. $80.00
C. $83.64
D. $87.40
E. $88.00
Let O = the old selling price and N = the new selling price.

O = 110/100 of the cost.
N = 115/100 of the cost.
Thus:
O : N = (110/100) : (115/100) = 110:115 = 22:23.

The ratio above implies that O is a multiple of 22.
Of the answer choices, only E is a multiple of 22.
To confirm, if O=88, we get:
O : N = 88:92 = 22:23.

The correct answer is E.
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by nisagl750 » Tue Nov 27, 2012 10:30 am
GMATGuruNY wrote: Thus:
O : N = (110/100) : (115/100) = 110:115 = 22:23
I didn't get this. Why we took ratio of Old and New selling price.

new selling price = 115/100of C.P
New selling price is 92.
If C.P is unchanged, Why can't we simply equate both???

am I missing something?
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by GMATGuruNY » Tue Nov 27, 2012 12:18 pm
nisagl750 wrote:
GMATGuruNY wrote: Thus:
O : N = (110/100) : (115/100) = 110:115 = 22:23
I didn't get this. Why we took ratio of Old and New selling price.

new selling price = 115/100of C.P
New selling price is 92.
If C.P is unchanged, Why can't we simply equate both???

am I missing something?
Your reasoning is correct, but you answered the wrong question.
The question stem asks not for the CP but for the OLD SELLING PRICE.
The old selling price earned a profit of 10%.
Since CP = 80, the old selling price = CP + 10% profit = 80 + .1(80) = 88.
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by nisagl750 » Tue Nov 27, 2012 6:51 pm
GMATGuruNY wrote: Your reasoning is correct, but you answered the wrong question.
Oops....I made a blunder here.....GMAT has no place for such mistakes :(
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