GMAT paper test 37 # 14

by **Guest2** Fri Sep 21, 2007 2:39 pm

ManhattanGMAT instructors: thanks for taking the time to answer our questions!!!
I really appreciate the insight!!

Here's my question:

A retailer sold an appliance for 30% above cost, which represented a gross profit of $21. For what price did the retailer sell the appliance?

a) $27.30
b) $51.00
c) $63.00
d) $70.00
e) $91.00

This is what i'm thinking-
130%(x)=$21
but i'm missing the next step(s).....

by **RonPurewal** Mon Oct 01, 2007 5:17 am

Nope - you're confusing PROFIT and REVENUE. You don't need a lot of business background for the GMAT - in fact, these two concepts, together with cost, are about all you need - but you have to master at least these.

Profit = Revenue - Cost

In this case, Revenue is 130% of cost, and Cost is (of course) 100% of cost. So Profit = 130% - 100% = 30% of cost.

Therefore, 21 = 0.30(Cost)
70 = Cost
so selling price = 70 + 21 = $91.00.