We start with some basic definitions and a formula sheet. To provide clarity, we have added some practice problems with their respective answers.
Basic definitions
Cost Price (CP): The price paid by a person to buy a product is the cost price of the product for that person.
Selling Price (SP): The price at which a person sells a product is the sales price of the product for that person.
Gain: If SP>CP then the difference SP-CP is known as gain or profit.
Loss: if CP>SP then the difference CP-SP is known as loss.
Marked Price (MP): While selling goods, a certain percentage is added to the cost price. This addition is called percentage mark up, and thus money thus obtained is called the marked price.
Formulas
Profit = SP-CP
SP = Profit + CP
CP = SP – Profit
Percentage Profit or Gain % = (Profit * 100) / CP
SP = [1 + (%Gain / 100)] * C.P = {(100 + Gain%) * CP}/ 100
CP = 100 * SP / (100 * Gain%)
Loss = CP – SP
SP = CP – Loss
CP = SP + Loss
CP + Mark up = Marked price
CP + %Mark up on CP = Marked Price
Marked price - %Discount = Selling price
Discount = MP-SP
Discount% = (Discount/MP) * 100
Practice Problems
(1) What percentage of profit is made on a product sold for $30 if its overall production cost was $22.5?
🔘33.33%
🔘87.5%
🔘66.67%
🔘25%
🔘75%
Answer : 33.33%
(2) Joy buys a truck from a mean salesman who charges him 15% over the original price of a $20,000 truck. Jim buys the same truck from a much nicer salesman who gives him a 8% discount off of the original price. How much more does Joy spend on the car than Jim does?
🔘$7000
🔘$5000
🔘$4200
🔘$2500
🔘$3500
Answer : $7000
(3) A new t-shirt has a total cost of $8 for a given retailer. Its current price is $15. If the retailer discounts the cost of the shirt by 20%, how many must it sell in order to make the same amount of profit as when it sold 300 of the shirts at the original price?
🔘400
🔘395
🔘525
🔘360
🔘None of the other answers
Answer : 525
(4) A shirt costs $12 to manufacture. If the marketing and sales costs are a 75% addition to this manufacturing cost. What is the minimum price necessary for making a 50% profit?
🔘$18
🔘$21
🔘$16.5
🔘$10.5
🔘$31.5
Answer : $31.5
(5) A boy with a lemonade stand sells cups of lemonade for a quarter each. He has bought $20 worth of supplies and is able to make 500 cups of lemonade with the supplies. If he has to pay a business tax of 4% for each cup he sells, how many cups will he have to sell in order to break even? (Numeric Entry)
Answer : 84 cups
(This is a numeric entry question. In your actual GRE exam, you will be provided with a space to write the answer within.)
(6) A laptop computer costs $235 to manufacture. If it is sold for $578, what is the percent of profit made on the item?
🔘145.96%
🔘59.34%
🔘53.38%
🔘245.96%
🔘343%
Answer : 145.96%
(7) Sally buys a dress that is a 20% discount from the original price. If she sells it at a 10% markup from her purchase price and profits $10 from the sale, what was the original price of the dress?
🔘100
🔘110
🔘20
🔘125
🔘120
Answer : 125
(8) The original cost of a shirt is x dollars.
Quantity A | Quantity B |
| x | The cost of the shirt if the original cost is first increased by 10% and then decreased by 10% |
🔘Quantity A is greater
🔘Quantity B is greater
🔘The two quantities are equal
🔘The relationship cannot be determined from the information given
Answer : Quantity A is greater
The questions 9-12 are based on the following graphs:
(9) In 1998, what were the total profits from all hardware tool sales? (Numeric Entry)
Answer : 200,000
(10) Of the following, what is the closest to the percentage change in profits from table as between 1998 and 1999?
🔘A 33% increase
🔘A 17% decrease
🔘A 33% decrease
🔘A 50% decrease
🔘A 50% increase
Answer : A 33% decrease
(11) If the total manufacturing cost of table saws in 1993 was $22,000, what was the price per saw? (Numeric Entry)
Answer : 700
(12) In 1998, what were the approximate profits from sales of cordless drills?
🔘$70,000
🔘$80,000
🔘$90,000
🔘$100,000
🔘$50,000
Answer : $70,000
(13) Selling 12 candies at a price of $10 yields a loss of a%. Selling 12 candies at a price of $12 yields a profit of a%. What is the value of a? Select all values.
🔘11/100
🔘100/11
🔘10
🔘11
🔘11/1100
🔘9.09
Answer : 100/11, 9.09
(14) A car dealer sold two trucks for $40,000 each, resulting in a 25% profit on one car and a 20% loss on the other car.
| Quantity A | Quantity B |
| The dealer's net gain | The dealer's net loss |
🔘Quantity A is greater.
🔘Quantity B is greater.
🔘The two quantities are equal.
🔘The relationship cannot be determined from the information given.
Answer : Quantity B is greater
(15) A factory has fixed costs of $25,000 per month. It manufactures widgets at a total manufacturing cost of $45 per widget. They are sold at $60. How many widgets must be sold in any given month in order to break even?
🔘1666
🔘555
🔘1667
🔘556
🔘1753
Answer : 1667
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