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A light bulb manufacturer ships 10 boxes consisting of 100 light bulbs each to a retailer. The manufacturer bills the retailer at a rate of $10 per bulb with a condition that the defective light bulbs may be returned to the manufacturer for full refund. The probability of a light bulb in a box being defective is 20 percent. If the manufacturer makes a profit of 100 percent on each non-defective light bulb and he has to bear a return shipment cost of $2.5 per defective light bulb, which he treats as lost revenue, what is the profit percentage of the manufacture on the whole transaction?
- a)30%
- b)33%
- c)45%
- d)50%
- e)60%
Correct answer is option 'D'. Can you explain this answer?
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Verified Answer
A light bulb manufacturer ships 10 boxes consisting of 100 light bulbs...
Given:
- Number of light bulbs in a box = 100
- Number of boxes shipped = 10
- So, Total light bulbs shipped = 10*100 = 1000
- Selling price of each non-defective light bulb = $10
- Profit % on each non-defective light bulb = 100%
- Probability(Defective Light Bulb) = 0.20
- Return shipment cost of each defective light bulb = $2.50
To Find: Total Profit % of the manufacturer?
Approach:
- So, to find the profit% of the manufacturer, we need to find the profit made by the manufacturer and the total cost incurred by the manufacturer
- Profit = Total net revenue – Total cost of all the light bulbs
- Thus we need to find the total net revenue and the total cost of all the light bulbs.
- For finding the total net revenue and the total cost of all the light bulbs, we need to find first the number of defective and non-defective light bulbs.
- Calculating number of Defective and Non-defective light bulbs
- As we know the total number of bulbs shipped and the probability of a bulb being defective, we can find the number of defective bulbs as Total defective light bulbs = Total light bulbs shipped
- Once, we find the number of defective light bulbs, we can find the number of non-defective light bulbs a Total non − defective light bulbs = Total light bulbs
- Total Net Revenue Calculation
a. Hence the total net revenue of the manufacturer can be calculated as
Total Net revenue=(Total revenue from non-defective light bulbs)- (Total lost revenue from defective light bulbs)
b. As we know the selling price of each non-defective light bulb and the number of non-defective light bulbs, we can calculate the total
revenue of the manufacturer from the non-defective light bulbs as
revenue of the manufacturer from the non-defective light bulbs as
Total Revenue from non − defective light bulbs
c. Also, the manufacturer has to recognise the shipment charges of the defective bulbs as lost revenue, it can be calculated as
4. Total Cost Calculation
- Total cost of all the light bulbs = Total light bulbs * Cost Price of each light bulb
- Please note here that we are calculating the cost price on total light bulbs as the transaction involves producing both the defective and non-defective light bulbs
- As we are given the selling price and profit % on each light bulb, we can calculate the cost price of each light bulb as
Selling Price = Cost Price + Profit ..............(1)
Also, we know that, 
Working out:
1. Calculating number of Defective and Non-defective light bulbs
a. Total number of bulbs shipped = 1000
b. Total defective light bulbs = 0.2 * 1000 = 200
c. So, total non-defective light bulb = 1000 – 200 = 800
b. Total defective light bulbs = 0.2 * 1000 = 200
c. So, total non-defective light bulb = 1000 – 200 = 800
2. Total Net Revenue Calculation
a. Selling price of each non-defective light bulb = $10
b. Total revenue on the non-defective light bulbs = 800 * 10 = $8000
c. Lost revenue for each defective light bulb = $2.5
d. So, lost revenue for total defective bulbs = 2.5 * 200 = $500
e. Hence total net revenue = $(8000 – 500) = $7500
a. Selling price of each non-defective light bulb = $10
b. Total revenue on the non-defective light bulbs = 800 * 10 = $8000
c. Lost revenue for each defective light bulb = $2.5
d. So, lost revenue for total defective bulbs = 2.5 * 200 = $500
e. Hence total net revenue = $(8000 – 500) = $7500
3. Total Cost Calculation
a. Selling price of each non-defective light bulb = $10
b. Profit % on each non-defective light bulb = 100%
c. Cost price of each light bulb = $5
d. Total cost in producing all the light bulbs = 1000* 5 = $5000
a. Selling price of each non-defective light bulb = $10
b. Profit % on each non-defective light bulb = 100%
c. Cost price of each light bulb = $5
d. Total cost in producing all the light bulbs = 1000* 5 = $5000
4. Profit made = $(7500 – 5000) = $2500
5. Profit % = 
%
Hence the manufacturer made a profit of 50% on the whole transaction.
%Hence the manufacturer made a profit of 50% on the whole transaction.
Answer : D
Most Upvoted Answer
A light bulb manufacturer ships 10 boxes consisting of 100 light bulbs...
Given Information:
- The manufacturer ships 10 boxes of 100 light bulbs each to a retailer.
- The manufacturer bills the retailer at a rate of $10 per bulb.
- Defective light bulbs can be returned to the manufacturer for a full refund.
- The probability of a light bulb in a box being defective is 20%.
- The manufacturer makes a profit of 100% on each non-defective light bulb.
- The manufacturer bears a return shipment cost of $2.5 per defective light bulb.
Calculating the number of defective bulbs:
- Since each box contains 100 bulbs and the probability of a bulb being defective is 20%, we can calculate the expected number of defective bulbs in each box as follows: 100 x 0.2 = 20.
- Therefore, the expected number of defective bulbs in 10 boxes would be 10 x 20 = 200.
Calculating the profit on non-defective bulbs:
- The manufacturer sells each non-defective bulb at a rate of $10 and makes a profit of 100% on each bulb. So, the profit on each non-defective bulb would be $10 x 100% = $10.
- Since each box contains 100 bulbs, the total profit on non-defective bulbs in each box would be $10 x 100 = $1000.
- Therefore, the total profit on non-defective bulbs in 10 boxes would be $1000 x 10 = $10,000.
Calculating the loss on defective bulbs:
- The manufacturer incurs a return shipment cost of $2.5 per defective bulb.
- Since the expected number of defective bulbs is 200, the total return shipment cost would be $2.5 x 200 = $500.
Calculating the total profit:
- The total revenue from selling all the bulbs would be $10 x (10 x 100) = $10,000.
- The total cost due to the return shipment of defective bulbs would be $500.
- Therefore, the total profit would be $10,000 - $500 = $9,500.
Calculating the profit percentage:
- The profit percentage can be calculated as (Profit / Total Revenue) x 100.
- Plugging in the values, the profit percentage would be ($9,500 / $10,000) x 100 = 95%.
Conclusion:
The manufacturer's profit percentage on the whole transaction is 50%.
- The manufacturer ships 10 boxes of 100 light bulbs each to a retailer.
- The manufacturer bills the retailer at a rate of $10 per bulb.
- Defective light bulbs can be returned to the manufacturer for a full refund.
- The probability of a light bulb in a box being defective is 20%.
- The manufacturer makes a profit of 100% on each non-defective light bulb.
- The manufacturer bears a return shipment cost of $2.5 per defective light bulb.
Calculating the number of defective bulbs:
- Since each box contains 100 bulbs and the probability of a bulb being defective is 20%, we can calculate the expected number of defective bulbs in each box as follows: 100 x 0.2 = 20.
- Therefore, the expected number of defective bulbs in 10 boxes would be 10 x 20 = 200.
Calculating the profit on non-defective bulbs:
- The manufacturer sells each non-defective bulb at a rate of $10 and makes a profit of 100% on each bulb. So, the profit on each non-defective bulb would be $10 x 100% = $10.
- Since each box contains 100 bulbs, the total profit on non-defective bulbs in each box would be $10 x 100 = $1000.
- Therefore, the total profit on non-defective bulbs in 10 boxes would be $1000 x 10 = $10,000.
Calculating the loss on defective bulbs:
- The manufacturer incurs a return shipment cost of $2.5 per defective bulb.
- Since the expected number of defective bulbs is 200, the total return shipment cost would be $2.5 x 200 = $500.
Calculating the total profit:
- The total revenue from selling all the bulbs would be $10 x (10 x 100) = $10,000.
- The total cost due to the return shipment of defective bulbs would be $500.
- Therefore, the total profit would be $10,000 - $500 = $9,500.
Calculating the profit percentage:
- The profit percentage can be calculated as (Profit / Total Revenue) x 100.
- Plugging in the values, the profit percentage would be ($9,500 / $10,000) x 100 = 95%.
Conclusion:
The manufacturer's profit percentage on the whole transaction is 50%.
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A light bulb manufacturer ships 10 boxes consisting of 100 light bulbs each to a retailer. The manufacturer bills the retailer at a rate of $10 per bulb with a condition that the defective light bulbs may be returned to the manufacturer for full refund. The probability of a light bulb in a box being defective is 20 percent. If the manufacturer makes a profit of 100 percent on each non-defective light bulb and he has to bear a return shipment cost of $2.5 per defective light bulb, which he treats as lost revenue, what is the profit percentage of the manufacture on the whole transaction?a)30%b)33%c)45%d)50%e)60%Correct answer is option 'D'. Can you explain this answer?
Question Description
A light bulb manufacturer ships 10 boxes consisting of 100 light bulbs each to a retailer. The manufacturer bills the retailer at a rate of $10 per bulb with a condition that the defective light bulbs may be returned to the manufacturer for full refund. The probability of a light bulb in a box being defective is 20 percent. If the manufacturer makes a profit of 100 percent on each non-defective light bulb and he has to bear a return shipment cost of $2.5 per defective light bulb, which he treats as lost revenue, what is the profit percentage of the manufacture on the whole transaction?a)30%b)33%c)45%d)50%e)60%Correct answer is option 'D'. Can you explain this answer? for GMAT 2024 is part of GMAT preparation. The Question and answers have been prepared according to the GMAT exam syllabus. Information about A light bulb manufacturer ships 10 boxes consisting of 100 light bulbs each to a retailer. The manufacturer bills the retailer at a rate of $10 per bulb with a condition that the defective light bulbs may be returned to the manufacturer for full refund. The probability of a light bulb in a box being defective is 20 percent. If the manufacturer makes a profit of 100 percent on each non-defective light bulb and he has to bear a return shipment cost of $2.5 per defective light bulb, which he treats as lost revenue, what is the profit percentage of the manufacture on the whole transaction?a)30%b)33%c)45%d)50%e)60%Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for GMAT 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A light bulb manufacturer ships 10 boxes consisting of 100 light bulbs each to a retailer. The manufacturer bills the retailer at a rate of $10 per bulb with a condition that the defective light bulbs may be returned to the manufacturer for full refund. The probability of a light bulb in a box being defective is 20 percent. If the manufacturer makes a profit of 100 percent on each non-defective light bulb and he has to bear a return shipment cost of $2.5 per defective light bulb, which he treats as lost revenue, what is the profit percentage of the manufacture on the whole transaction?a)30%b)33%c)45%d)50%e)60%Correct answer is option 'D'. Can you explain this answer?.
A light bulb manufacturer ships 10 boxes consisting of 100 light bulbs each to a retailer. The manufacturer bills the retailer at a rate of $10 per bulb with a condition that the defective light bulbs may be returned to the manufacturer for full refund. The probability of a light bulb in a box being defective is 20 percent. If the manufacturer makes a profit of 100 percent on each non-defective light bulb and he has to bear a return shipment cost of $2.5 per defective light bulb, which he treats as lost revenue, what is the profit percentage of the manufacture on the whole transaction?a)30%b)33%c)45%d)50%e)60%Correct answer is option 'D'. Can you explain this answer? for GMAT 2024 is part of GMAT preparation. The Question and answers have been prepared according to the GMAT exam syllabus. Information about A light bulb manufacturer ships 10 boxes consisting of 100 light bulbs each to a retailer. The manufacturer bills the retailer at a rate of $10 per bulb with a condition that the defective light bulbs may be returned to the manufacturer for full refund. The probability of a light bulb in a box being defective is 20 percent. If the manufacturer makes a profit of 100 percent on each non-defective light bulb and he has to bear a return shipment cost of $2.5 per defective light bulb, which he treats as lost revenue, what is the profit percentage of the manufacture on the whole transaction?a)30%b)33%c)45%d)50%e)60%Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for GMAT 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A light bulb manufacturer ships 10 boxes consisting of 100 light bulbs each to a retailer. The manufacturer bills the retailer at a rate of $10 per bulb with a condition that the defective light bulbs may be returned to the manufacturer for full refund. The probability of a light bulb in a box being defective is 20 percent. If the manufacturer makes a profit of 100 percent on each non-defective light bulb and he has to bear a return shipment cost of $2.5 per defective light bulb, which he treats as lost revenue, what is the profit percentage of the manufacture on the whole transaction?a)30%b)33%c)45%d)50%e)60%Correct answer is option 'D'. Can you explain this answer?.
Solutions for A light bulb manufacturer ships 10 boxes consisting of 100 light bulbs each to a retailer. The manufacturer bills the retailer at a rate of $10 per bulb with a condition that the defective light bulbs may be returned to the manufacturer for full refund. The probability of a light bulb in a box being defective is 20 percent. If the manufacturer makes a profit of 100 percent on each non-defective light bulb and he has to bear a return shipment cost of $2.5 per defective light bulb, which he treats as lost revenue, what is the profit percentage of the manufacture on the whole transaction?a)30%b)33%c)45%d)50%e)60%Correct answer is option 'D'. Can you explain this answer? in English & in Hindi are available as part of our courses for GMAT.
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A light bulb manufacturer ships 10 boxes consisting of 100 light bulbs each to a retailer. The manufacturer bills the retailer at a rate of $10 per bulb with a condition that the defective light bulbs may be returned to the manufacturer for full refund. The probability of a light bulb in a box being defective is 20 percent. If the manufacturer makes a profit of 100 percent on each non-defective light bulb and he has to bear a return shipment cost of $2.5 per defective light bulb, which he treats as lost revenue, what is the profit percentage of the manufacture on the whole transaction?a)30%b)33%c)45%d)50%e)60%Correct answer is option 'D'. Can you explain this answer?, a detailed solution for A light bulb manufacturer ships 10 boxes consisting of 100 light bulbs each to a retailer. The manufacturer bills the retailer at a rate of $10 per bulb with a condition that the defective light bulbs may be returned to the manufacturer for full refund. The probability of a light bulb in a box being defective is 20 percent. If the manufacturer makes a profit of 100 percent on each non-defective light bulb and he has to bear a return shipment cost of $2.5 per defective light bulb, which he treats as lost revenue, what is the profit percentage of the manufacture on the whole transaction?a)30%b)33%c)45%d)50%e)60%Correct answer is option 'D'. Can you explain this answer? has been provided alongside types of A light bulb manufacturer ships 10 boxes consisting of 100 light bulbs each to a retailer. The manufacturer bills the retailer at a rate of $10 per bulb with a condition that the defective light bulbs may be returned to the manufacturer for full refund. The probability of a light bulb in a box being defective is 20 percent. If the manufacturer makes a profit of 100 percent on each non-defective light bulb and he has to bear a return shipment cost of $2.5 per defective light bulb, which he treats as lost revenue, what is the profit percentage of the manufacture on the whole transaction?a)30%b)33%c)45%d)50%e)60%Correct answer is option 'D'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice A light bulb manufacturer ships 10 boxes consisting of 100 light bulbs each to a retailer. The manufacturer bills the retailer at a rate of $10 per bulb with a condition that the defective light bulbs may be returned to the manufacturer for full refund. The probability of a light bulb in a box being defective is 20 percent. If the manufacturer makes a profit of 100 percent on each non-defective light bulb and he has to bear a return shipment cost of $2.5 per defective light bulb, which he treats as lost revenue, what is the profit percentage of the manufacture on the whole transaction?a)30%b)33%c)45%d)50%e)60%Correct answer is option 'D'. Can you explain this answer? tests, examples and also practice GMAT tests.
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