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An online merchant sells wine for $20 for an individual

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GMAT Club Legend
GMAT Club Legend
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Joined: 07 Jun 2014
Posts: 4752
GRE 1: Q167 V156
WE: Business Development (Energy and Utilities)
Followers: 93

Kudos [?]: 1665 [0], given: 396

CAT Tests
An online merchant sells wine for $20 for an individual [#permalink] New post 27 May 2018, 03:53
Expert's post
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Question Stats:

50% (00:00) correct 50% (00:00) wrong based on 2 sessions
An online merchant sells wine for $20 for an individual bottle or $220 for a case of 12. Either way, the merchant’s cost for the wine is $10 per bottle. Shipping costs the merchant $5 for a bottle and $40 for a case. If 12 cases and 60 individual bottles were sold, and there were no other revenue or expenses, the merchant’s profit was equal to which of the following?

(A) $780
(B) $1,020
(C) $2,160
(D) $2,640
(E) $3,840
[Reveal] Spoiler: OA

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Sandy
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GMAT Club Legend
GMAT Club Legend
User avatar
Joined: 07 Jun 2014
Posts: 4752
GRE 1: Q167 V156
WE: Business Development (Energy and Utilities)
Followers: 93

Kudos [?]: 1665 [0], given: 396

CAT Tests
Re: An online merchant sells wine for $20 for an individual [#permalink] New post 27 May 2018, 13:05
Expert's post
Explanation

Profit is equal to Revenue – Expenses. First, calculate revenue:

12 cases sold for $220 each = $2640
60 Bottle sold for $20 each = $1200
-------------------------------------
Total Revenue = $3480

Now, calculate expenses. How many total bottles of wine were sold? 12 cases × 12 bottles, plus 60 individual bottles = 204 bottles. Note that the bottles sold individually versus those sold in cases have the same purchase cost ($10), but different shipping costs. Thus:

204 bottles of $10 each = $2040
Shipping of bottles = \(60 \times $5\)
Shipping of case = \(12 \times $40\)
-------------------------------------
Total Revenue = $2820


Profit = Revenue – Expenses Profit = $3,840 – $2,820 Profit = $1,020

Hence option B is correct!
_________________

Sandy
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Re: An online merchant sells wine for $20 for an individual   [#permalink] 27 May 2018, 13:05
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An online merchant sells wine for $20 for an individual

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