A manufacturer’s gross profit on an item was 20 percent of the cost of the item. If the manufacturer increased the selling price of the item from $60 to $65, while kept the cost of the item same, then the manufacturer’s profit on the item after the price increase was what percent of the cost of the item?

Answer Choices

Correct answer marked below

12%

15%

20%

24%

30%

Correct

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Comments

ArzishJun 20

Wait, so the original profit was 20% of cost and SP was $60? That means cost is $50, right? Then new profit is $15 on $50 = 30%. Took me a sec but pretty straightforward once you set up cost = x.

NainaaJun 24

Thanks, I was stuck on why 20% didn't match 60. Forgot profit is % of COST not selling price.

DivaAug 14

Is this really 555-605? The wording tripped me up a bit with 'gross profit' vs 'profit' but the math is easy. Good confidence booster.

VanshikaAug 23

Quick strategy note: whenever they give you profit as % of cost and a selling price, just set Cost = 100 or solve directly. Saved me a lot of time on these.

NicoleSep 26

I get that cost is $50 and new profit is $15, but why isn't the answer 15%? I keep dividing by the new SP ($65). Can someone explain the base without giving away the choice?

What this question tests

What it tests

Your ability to compute percentage change, percentage of a whole, and to work backwards from a final value.

Common trap

Treating successive percentage changes as additive — a 10% rise then a 10% fall is not back to the start.