If a person sells a watch for $240 and makes a profit of 20%, what was the cost

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Question: If a person sells a watch for $240 and makes a profit of 20%, what was the cost price?

Options:

Correct Answer: $200

Solution:

Let Cost Price = x. Selling Price = x + 20% of x = 1.2x. 1.2x = 240. x = 240/1.2 = 200.

If a person sells a watch for $240 and makes a profit of 20%, what was the cost price?

If a person sells a watch for $240 and makes a profit of 20%, what was the cost price?

Step 1: Understand that the Selling Price (SP) is $240.
Step 2: Know that the profit is 20%. This means the Selling Price is 120% of the Cost Price (CP).
Step 3: Write the relationship: Selling Price = Cost Price + Profit. In terms of CP, this is SP = CP + 20% of CP.
Step 4: Convert 20% into a decimal: 20% = 0.2. So, 20% of CP is 0.2 * CP.
Step 5: Rewrite the equation: SP = CP + 0.2 * CP = 1.2 * CP.
Step 6: Substitute the Selling Price into the equation: 1.2 * CP = 240.
Step 7: To find CP, divide both sides by 1.2: CP = 240 / 1.2.
Step 8: Calculate the result: CP = 200.

Profit Calculation – Understanding how to calculate profit based on selling price and cost price.
Percentage Increase – Applying percentage increase to determine the selling price from the cost price.
Algebraic Manipulation – Using algebra to solve for the unknown variable (cost price) in an equation.