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Commision percentage Problem

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tarunsingh20
 Post subject: Commision percentage Problem
 Post Posted: Fri Aug 06, 2010 9:14 pm 
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A distributor sells a product through an online store, which takes a commision of 20% of the proce set by the distributor. The Distributor obtains the product from producer at $15 per item. What is the price that buyer observes online if the distributor wants to maintain 20% profit on cost of item ?

A 18
B 21.6
C 22
D 22.5
E 27

How to approach this problem

regards
T
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kartikeya.payautomata
 Post subject: Re: Commision percentage Problem
 Post Posted: Sun Aug 08, 2010 6:24 am 
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Posts: 13
Is the answere 22.5

Let us consider the price set by distributor is x
so 0.2x goes to the online store remaning is with means 0.8x goes to distributor
but he wants to have a gain of 20% on 15 the cost price of the product
so 0.8x=1.2*15=18
so x is equal to 22.5 the price set by distributor.

I hope my logic is correct
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tarunsingh20
 Post subject: Re: Commision percentage Problem
 Post Posted: Sun Aug 08, 2010 9:58 pm 
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Hi,

I do not know the correct answer but I looked at it this way :
If distributor got the stuff at $15, adding his 20% yields price as 18. Now the online store would add its commision to it (20 % of 18 = 3.6). So the final price that the buyer sees is 18 + 3.6 = 21.6 .

I am not sure which one is more plausible.

regards
T
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mschwrtz
 Post subject: Re: Commision percentage Problem
 Post Posted: Thu Sep 02, 2010 5:49 pm 
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Posts: 506
kartikeya.payautomata, that's exactly right.

The trouble with your approach, tarunsingh20, is that you have the online store taking a commission of 20% of (sales price-commission). In fact, the online store takes 20% of sales price.

Start with the question:

What is the sales price?

kartikeya.payautomata called it x, and so shall we.

Now let's look at the data:

Well, x-commission, or 0.8x, equals the price the distributor will receive.

And the distributor will recieve 1.2*15....

Now you have kartikeya's equation.

Remember, every percent is a percent of some whole. A percent change problem with more than one percent almost certainly has more than one whole. A big part of translating a percent question is figuring out what the whole is for each percent.
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