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Russell sells used cars

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by gmatdriller » Tue Nov 15, 2011 11:31 am
Russell sells used cars and receives a $75 commission plus 1% of the
sticker price for each car sold.

Last week, Russell sold 8 cars for an average price of $7,787.50. What
were his earnings last week?

(A) $600 (B) $623 (C) $698 (D) $1223 (E) $6830

I found the wording rather confusing:
Is it $75 (constant) and 1% per car
OR
$75 per car PLUS 1% per car commission.

How do i avoid the problem of interpreting such questions?


OA is
D
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by CappyAA » Tue Nov 15, 2011 11:39 am
Russell earns a flat rate of $75 per car sold PLUS 1% of the sticker price. So for his total commission, we can write the equation:

Commission = $75*(No. of Cars Sold) + 0.01*(Avg. Price)*(No. of Cars Sold)
= 75*8 + 0.01*8*7787.5
= 600 + 623
= $1223

D

You are going to have to read the description very carefully to make sure you get the wording straight. But in other similar GMAT questions, you'll see similar setups where there's a flat rate plus a variable rate.
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by fueledGMAT » Tue Nov 15, 2011 11:44 am
Answer is D

To solve:

Take average of cost of cars (7787.50) times the number of cars sold (8) to get 62,300

From there, take 1% of 62,300 to get the total in commission = $623

Now, take the total cars sold and multiply it by the $75 per car = $600

add the two together and you get the answer!
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by knight247 » Tue Nov 15, 2011 11:44 am
To answer ur questions first. ...It is $75 flat per car. Then 1% of the price of each car sold.

For each car sold he earns $75. Lets focus on this part for now.
So if he sells 8 cars then he'd earn 75*8=$600. This is only part of his earning.

Now, lets focus on the next part which says he also earns 1% of the sticker price of EACH car sold.

Let the prices of the 8 cars be A B C D E F G H . Their average =7787.5
hence (A+B+C+D+E+F+G+H)/8=7787.5
A+B+C+D+E+F+G+H=7787.5*(8)
The sum of the prices of all the cars is nothing but the sum of the sticker prices of ALL the cars. And he earns 1% of this amount [7787.5*(8)]/100=77.87*8≈78*8=624

Summing up both the parts we get 624+600=1224 Closest answer is [spoiler]$1223[/spoiler] Hence D
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by MBA.Aspirant » Wed Nov 16, 2011 4:53 pm
(8*75) + (8* 77.875) = 600 + 623 = 1223
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by gmatdriller » Tue Nov 22, 2011 11:37 pm
I understand how to do the calculations provided the language is clear.
The problem is this:
Should the first sentence be framed as
"Russell sells used cars and receives a $75 commission EACH plus 1% of the
sticker price for each car sold. I feel, to avoid confusion, "each" should
also be emphasized on the $75....what do you guys think?
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