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In a recurring manufacture – to- sale cycle, a toy manufacturer sells a type of toys to a retailer at a profit that varies between 50% and 60%, depending on the size of the retailer’s order (the retailer gets a proportional discount for bulk purchase of toys). The retailer marks up the price of these toys by 20% to 40% depending on the location of his different shops. The retailer then offers a discount, across all shops, of either 10% or $15 on the purchase of a toy to the customer. If the manufacturer incurs a cost of $100 to manufacture a toy, the profit earned by the retailer per toy must be between:
  • a)
    $12 and $45
  • b)
    $15 and $45
  • c)
    $12 and $49
  • d)
    $17 and $49
  • e)
    $17 and $45
Correct answer is option 'C'. Can you explain this answer?
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Verified Answer
In a recurring manufacture – to- sale cycle, a toy manufacturer ...
Given:
  • 50% ≤ Profit% of manufacturer ≤ 60%
    • Cost Price of manufacturer = $100
  • 20% ≤ Mark-up percentage of the retailer ≤ 40%
  • Discount = {10% or $15 per toy}
To Find: Range of profit earned by the retailer
Approach:
  1. To find the range of the profit of the retailer, we need to find the maximum and minimum profit earned by the retailer.
  2. Maximum Profit earned = Maximum Selling Price – Corresponding Cost Price
  3. Minimum Profit earned = Minimum Selling Price – Corresponding Cost Price
    • As the mark-up price of the manufacturer is dependent on the cost price of the manufacturer and the selling price of the manufacturer is dependent on the mark-up price, for calculating the profit earned the selling price and the cost price will be dependent.
  4. Cost Price of Retailer
    • (Cost Price of retailer) = (selling price of manufacturer)
    • Selling Price of Manufacturer depends upon the profit made by the manufacturer as the cost price of the manufacturer is fixed
      • So, if the manufacturer makes the maximum profit, his selling price will be the maximum. And so, the retailer will have the maximum cost price
      • If the manufacturer makes the minimum profit, his selling price will be the minimum. And so, the retailer’s cost price will be minimum
  5. Selling Price of Retailer 
    Selling Price of the retailer will depend on the mark up% and the discount offered by the retailer.
ii. 
iii. Selling price of the retailer will be maximum when the marked price is maximum and the discount offered is minimum
  1. Marked price will be maximum when the mark-up% and the cost price is maximum
  2. Marked price will be minimum when the mark-up% and the cost price is minimum
iv.  Selling price of the retailer will be minimum when the marked price is minimum and the discount offered is maximum
6. So, we see here that the maximum selling price of the manufacturer depends on the maximum mark-up price of the retailer, which is further dependent on the maximum cost price of the retailer.
  1. Hence, maximum profit = Maximum selling price – maximum cost price
  2. Similarly, minimum profit = Minimum selling price – minimum cost price
Working out
  1. Cost Price of Retailer
    • Cost Price of manufacturer = $100 
    • Now, we know that Selling Price = Cost Price + Profit and profit% = ​
      • Combining the above two equations, we can write Selling price = Cost Price + Profit% * Cost Price
  • Maximum Selling price of manufacturer = $100 + maximum profit
i. Maximum profit% = 60%
ii. So, maximum selling price = 100 + 60% of 100 = 160
iii. So, maximum cost price of retailer = 160 …………..(1)
  • Minimum Selling Price of manufacturer = $100 + minimum profit
i. Minimum profit% = 50%
ii. So, minimum selling price = 100 +50% of 100 = 150
iii. So, minimum cost price of retailer = 150……………(2)
  1. Maximum marked price = Maximum cost price + maximum mark-up
    1. Maximum marked price = 160 + 40% of 160 = $224
  2. So, maximum selling price = 224 – 15 = 209………(3)
  3. So, we see that maximum selling price occurs for a cost price = $160
  4. Hence, maximum profit = 209 – 160 = $49
  • Minimum selling price = Minimum mark-up price – maximum discount
    • Minimum marked price = minimum cost price + mark-up% * cost price
    • Minimum marked price = 150 + 20% of 150 = $180
    • Minimum selling price = 180 – 10% of 180 = 162……..(4)
    • So, we see that minimum selling price occurs for a cost price of $150
    • Hence, minimum profit = 162 – 150 = $12
3. Hence, the profit ranges from $12 -$49
Answer: C
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Most Upvoted Answer
In a recurring manufacture – to- sale cycle, a toy manufacturer ...
In a recurring manufacturing process, a company produces the same product or range of products on a regular basis. This process involves various steps that are repeated in a continuous cycle to meet the demand for the products.

The manufacturing process typically starts with sourcing the raw materials required for production. These materials are then processed, transformed, and assembled to create the final product. This may involve cutting, shaping, molding, or combining different components.

Once the product is manufactured, it goes through quality control measures to ensure it meets the desired specifications and standards. This may include inspections, testing, and sampling to identify any defects or issues that need to be addressed.

After passing quality control, the finished products are packaged and prepared for distribution. This involves labeling, boxing, and organizing the products for shipping to customers or retailers.

Throughout the manufacturing process, companies often implement various measures to improve efficiency and reduce costs. This may include automation, streamlining workflows, implementing lean manufacturing principles, and using technology to optimize production.

In a recurring manufacturing process, the cycle is repeated on a regular basis to meet ongoing demand. This requires effective planning and coordination to ensure a smooth flow of materials, efficient production, and timely delivery of the products. It also involves monitoring and adjusting production levels based on market demand and customer feedback.

Overall, a recurring manufacturing process is a continuous cycle of producing and delivering products to meet customer needs. It requires careful planning, efficient execution, and continuous improvement to ensure the company remains competitive in the market.
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In a recurring manufacture – to- sale cycle, a toy manufacturer sells a type of toys to a retailer at a profit that varies between 50% and 60%, depending on the size of the retailer’s order (the retailer gets a proportional discount for bulk purchase of toys). The retailer marks up the price of these toys by 20% to 40% depending on the location of his different shops. The retailer then offers a discount, across all shops, of either 10% or $15 on the purchase of a toy to the customer. If the manufacturer incurs a cost of $100 to manufacture a toy, the profit earned by the retailer per toy must be between:a)$12 and $45b)$15 and $45c)$12 and $49d)$17 and $49e)$17 and $45Correct answer is option 'C'. Can you explain this answer?
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In a recurring manufacture – to- sale cycle, a toy manufacturer sells a type of toys to a retailer at a profit that varies between 50% and 60%, depending on the size of the retailer’s order (the retailer gets a proportional discount for bulk purchase of toys). The retailer marks up the price of these toys by 20% to 40% depending on the location of his different shops. The retailer then offers a discount, across all shops, of either 10% or $15 on the purchase of a toy to the customer. If the manufacturer incurs a cost of $100 to manufacture a toy, the profit earned by the retailer per toy must be between:a)$12 and $45b)$15 and $45c)$12 and $49d)$17 and $49e)$17 and $45Correct answer is option 'C'. 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 In a recurring manufacture – to- sale cycle, a toy manufacturer sells a type of toys to a retailer at a profit that varies between 50% and 60%, depending on the size of the retailer’s order (the retailer gets a proportional discount for bulk purchase of toys). The retailer marks up the price of these toys by 20% to 40% depending on the location of his different shops. The retailer then offers a discount, across all shops, of either 10% or $15 on the purchase of a toy to the customer. If the manufacturer incurs a cost of $100 to manufacture a toy, the profit earned by the retailer per toy must be between:a)$12 and $45b)$15 and $45c)$12 and $49d)$17 and $49e)$17 and $45Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for GMAT 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for In a recurring manufacture – to- sale cycle, a toy manufacturer sells a type of toys to a retailer at a profit that varies between 50% and 60%, depending on the size of the retailer’s order (the retailer gets a proportional discount for bulk purchase of toys). The retailer marks up the price of these toys by 20% to 40% depending on the location of his different shops. The retailer then offers a discount, across all shops, of either 10% or $15 on the purchase of a toy to the customer. If the manufacturer incurs a cost of $100 to manufacture a toy, the profit earned by the retailer per toy must be between:a)$12 and $45b)$15 and $45c)$12 and $49d)$17 and $49e)$17 and $45Correct answer is option 'C'. Can you explain this answer?.
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