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Question

Difficulty: EasyProfit, Loss, and Markup

A store owner purchases a bicycle for $150. To establish the list price, the store owner marks up the cost price by 40%. During a promotional sale, the bicycle is sold at a 20% discount off the list price. What is the store owner's net profit from the sale of the bicycle?

  1. $18Answer
  2. B
    $30
  3. C
    $42
  4. D
    $60
  5. E
    $168

Answer

$18
The correct answer of 18isobtainedbyfirstcalculatingthelistprice(18 is obtained by first calculating the list price ( 150 + 40% of 150=150 = 210), then computing the selling price (210−20210 - 20% of 210 = 168),andfinallyfindingtheprofit(168), and finally finding the profit ( 168 - 150=150 = 18).

Step-by-Step Solution

1
Calculate the list price after a 40% markup on the cost price of $150.
List Price = 150×1.40=150 × 1.40 = 210
Markup is applied directly to the cost price.
2
Calculate the selling price after a 20% discount on the list price of $210.
Selling Price = 210×(1−0.20)=210 × (1 - 0.20) = 210 × 0.80 = $168
Discounts are calculated based on the list price, not the cost price.
3
Subtract the original cost price from the final selling price to find the net profit.
Net Profit = 168−168 - 150 = $18
Profit is the difference between total revenue (selling price) and total cost.

Key Concept

Successive percentage changes with different bases (cost price vs. list price)
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Topics

Profit, Loss, and Markup

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