A toy store's gross profit on a computer game was 10%...

BREAKING: Target Test Prep releases Brand New 2026 On Demand GMAT prep course

Redeem

This topic has expert replies

Post new topic Post Reply

Previous Topic Next Topic

swerve: Legendary Member; Posts: 2499; Joined: Sun Oct 29, 2017 2:04 pm; Followed by:6 members

A toy store's gross profit on a computer game was 10%...

by swerve » Sat Feb 24, 2018 5:50 am

A toy store's gross profit on a computer game was 10% 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%

The OA is E.

Please, can any expert explain this PS question for me? I can't get the correct answer. I need your help. Thanks.

Quote

Source: Beat The GMAT — Problem Solving | Sat Feb 24, 2018 5:50 am

GMATGuruNY: GMAT Instructor; Posts: 15539; Joined: Tue May 25, 2010 12:04 pm; Location: New York, NY; Thanked: 13060 times; Followed by:1906 members; GMAT Score:790

by GMATGuruNY » Sat Feb 24, 2018 6:43 am

swerve wrote:A toy store's gross profit on a computer game was 10% 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%

A toy store's gross profit on a computer game was 10% of the cost of the game.
The store increased the selling price of the game from $44.
Since $44 yields 10% profit -- and 44 is 10% more than 40 -- the cost price of the game = 40.

If the store increased the selling price of the game 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?
Profit = (new selling price) - (cost price) = 46-40 = 6.
Profit percentage = (profit/cost) * 100 = (6/40) * 100 = 15.

The correct answer is E.

Private tutor exclusively for the GMAT and GRE, with over 20 years of experience.
Followed here and elsewhere by over 1900 test-takers.
I have worked with students based in the US, Australia, Taiwan, China, Tajikistan, Kuwait, Saudi Arabia -- a long list of countries.
My students have been admitted to HBS, CBS, Tuck, Yale, Stern, Fuqua -- a long list of top programs.

As a tutor, I don't simply teach you how I would approach problems.
I unlock the best way for YOU to solve problems.

For more information, please email me (Mitch Hunt) at [email protected].
Student Review #1
Student Review #2
Student Review #3

Quote

GMAT/MBA Expert

Scott@TargetTestPrep: GMAT Instructor; Posts: 8086; Joined: Sat Apr 25, 2015 10:56 am; Location: Los Angeles, CA; Thanked: 43 times; Followed by:29 members

by Scott@TargetTestPrep » Fri Jun 14, 2019 2:44 pm

swerve wrote:A toy store's gross profit on a computer game was 10% 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%

The OA is E.

Please, can any expert explain this PS question for me? I can't get the correct answer. I need your help. Thanks.

We are given that a toy store'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
[email protected]