Wholesaler's profit

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gibran: Senior | Next Rank: 100 Posts; Posts: 42; Joined: Sat Apr 12, 2008 8:51 am; Thanked: 1 times

by gibran » Tue May 20, 2008 5:49 am

A wholesaler bought 1,200 radios for $18 each. The wholesaler sold 60 percent of the radios for $30 each and the rest for $15 each. What was the wholesaler’s average (arithmetic mean) profit per radio?
A. $2
B. $3
C. $4
D. $5
E. $6

OA is E.

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Source: Beat The GMAT — Problem Solving | Tue May 20, 2008 5:49 am

garfield: Newbie | Next Rank: 10 Posts; Posts: 3; Joined: Fri Jun 15, 2007 9:24 pm; Location: UK

by garfield » Tue May 20, 2008 6:29 am

Wholesaler’s average (arithmetic mean) profit per radio has been asked here.So initial amount paid - 1200 * 18 = 28,800
60% sold for 30$ each + 40% sold for 15$ each = 720*30 + 480*15=21,600
Profit/radio = 28,800 - 21,600 = 7200/1200 = 6$

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garfield: Newbie | Next Rank: 10 Posts; Posts: 3; Joined: Fri Jun 15, 2007 9:24 pm; Location: UK

by garfield » Tue May 20, 2008 6:31 am

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ektamatta: Master | Next Rank: 500 Posts; Posts: 151; Joined: Tue May 13, 2008 7:04 pm; Location: dallas,tx usa; Thanked: 6 times

by ektamatta » Tue May 20, 2008 6:34 am

here's the way to solve this problem

$1200 radio= $18 each (1200*18= 21,600) (cost price)
60% of 1200= 720

1200-720= 480 remaining radio

720 *30= 21,600
480*15=7,200
add both 21,600 +7200=28,800( we got the selling price)
in order to find profit SP-CP= 28,800-21,600=7200(profit)

so airthemetic profit per radio will be 7200/ 1200=$6 per radio.
I hope i made it clear.

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AleksandrM: Legendary Member; Posts: 566; Joined: Fri Jan 04, 2008 11:01 am; Location: Philadelphia; Thanked: 31 times; GMAT Score:640

by AleksandrM » Tue May 20, 2008 9:24 am

I think that more than anything, this problem is testing your ability to keep all of your data orgazined on your paper and keep track of what you did and did not yet solve. Everything else is just arithmetic.

https://second-lap.blocked/

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gmatIntent: Junior | Next Rank: 30 Posts; Posts: 29; Joined: Mon Jul 11, 2011 1:09 am; Thanked: 1 times

by gmatIntent » Thu Sep 29, 2011 5:57 am

Other approach (may be faster)

(0.6*1200*30 + 0.4*1200*15 - 1200*18) / 1200
= (0.6*30 + 0.4*15 - 18) = 0.4 * 15 = 6$

Thanks

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Jeff@TargetTestPrep: GMAT Instructor; Posts: 1462; Joined: Thu Apr 09, 2015 9:34 amFollowed by: 22 members; Location: New York, NY; Thanked: 39 times

by Jeff@TargetTestPrep » Tue Jul 17, 2018 3:41 pm

gibran wrote:A wholesaler bought 1,200 radios for $18 each. The wholesaler sold 60 percent of the radios for $30 each and the rest for $15 each. What was the wholesaler's average (arithmetic mean) profit per radio?
A. $2
B. $3
C. $4
D. $5
E. $6

60% of 1,200 is 0.6 x 1,200 = 720. If these 720 radios are sold for $30 each, they will generate a profit of 720 x (30 - 18) = 720 x 12 = $8,640.

The rest of 1,200 - 720 = 480 radios are sold for $15 each, but they will generate a loss of 480 x (18 - 15) = 480 x 3 = $1,440.

Therefore, the total net profit is 8,640 - 1,440 = $7,200, and thus the average profit per radio is 7,200/1,200 = $6.

Answer: E

Jeffrey Miller
Head of GMAT Instruction
[email protected]

See why Target Test Prep is rated 5 out of 5 stars on BEAT the GMAT. Read our reviews

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GMAT/MBA Expert

[email protected]: Elite Legendary Member; Posts: 10392; Joined: Sun Jun 23, 2013 6:38 pmFollowed by: 511 members; Location: Palo Alto, CA; Thanked: 2867 times; GMAT Score:800

by [email protected] » Tue Jul 17, 2018 7:00 pm

Hi All,

We're told that a wholesaler bought 1,200 radios for $18 each, sold 60 percent of the radios for $30 each and the rest for $15 each. We're asked for the wholesaler's AVERAGE (arithmetic mean) profit per radio. This question has a great 'math shortcut' built into it that can help us to avoid doing lots of math. The question asks for the AVERAGE profit per radio - and we know the exact percents that were sold for a profit and for a loss, so the exact number of radios is actually irrelevant.

60% of the radios are sold at a profit of $30 - $18 = $12 each.
40% of the radios are sold at a loss of $18 - $15 = $3 each.

This means that for every 5 radios sold, 3 gain a profit of $12/each while the other 2 lose $3/each. That is a 'net gain' of (3)($12) - (2)($3) = $36 - $6 = $30 for every 5 radios sold. We're NOT asked for the total profit though; we're asked for the AVERAGE profit. That would be $30/5 = $6 per radio... regardless of the number of radios involved.

Final Answer: E

GMAT assassins aren't born, they're made,
Rich

Contact Rich at [email protected]

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