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by jcnissi » Sat Jun 12, 2010 10:24 pm
From the sale of sleeping bags, a retailer made a gross profit of 12 percent of the wholesale cost. If each sleeping bag was sold of $28, what was the wholesale cost per bag?

a. $3.00
b. $3.36
c. $24.64
d. $25.00
e. $31.36
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by outreach » Sat Jun 12, 2010 10:32 pm
D
jcnissi wrote:From the sale of sleeping bags, a retailer made a gross profit of 12 percent of the wholesale cost. If each sleeping bag was sold of $28, what was the wholesale cost per bag?

a. $3.00
b. $3.36
c. $24.64
d. $25.00
e. $31.36
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by jcnissi » Sat Jun 12, 2010 10:35 pm
How? I had C. I took .12 x 28.00 which gave me $3.36 and then I subtracted that from $28.00 to get $24.64
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by gmatmachoman » Sat Jun 12, 2010 11:19 pm
jcnissi wrote:How? I had C. I took .12 x 28.00 which gave me $3.36 and then I subtracted that from $28.00 to get $24.64
SP - CP = P

P = 0.12 * CP

SP = 1.12 CP

SP /1.12 = 28/1.12
CP = 25

SP : selling price

CP : cost price, P : profit
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by Stuart@KaplanGMAT » Sat Jun 12, 2010 11:52 pm
jcnissi wrote:How? I had C. I took .12 x 28.00 which gave me $3.36 and then I subtracted that from $28.00 to get $24.64
You calculated profit at 12% of the selling price; however, the question says that profit was 12% of the wholesale cost.

So:

selling price = 1.12 (cost)

Now, we really don't want to be dividing by 1.12, so a great way to proceed is backsolving. We have:

a. $3.00
b. $3.36
c. $24.64
d. $25.00
e. $31.36

we can quickly eliminate a, b and e as nonsensical. Since it has to be either c or d, and since d is a much simpler number, let's check that.

If the wholesale cost is $25, then the sale price should be:

1.12 * $25 = $25 + $3 = $28. Since that matches the price in the question stem, we know that (d) is correct.

In fact, even without doing the math we know that 1.12 * 24.64 isn't going to be an integer (multiplying the last digit of each by the other won't produce a "0"), so we know it has to be (d) without doing any calculations.
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