How to find amount of profit - PSAT Math

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Question

Each wooden chair that a carpenter makes requires $20 worth of supplies. He then sells the chairs for $50 each. The carpenter recently discovered a new supplier that would allow him to spend 25% less on supplies. If he doesn't change his selling price, by what percent could the carpenter increase his profit by using the new supplier?

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Answer

Using $20 worth of supplies and selling the chairs for $50 each, the carpenter is originally making a profit of $30 per chair.

The new supplier would reduce costs by 25% or 1/4. One-fourth of $20 is $5, so the new supplier would be $5 less, or $15.

If the selling price is the same ($50), then the carpenter would now make a profit of $35 per chair, a change of $5.

To calculate percent increase, divide the actual change in profit by the original profit amount, and multiply the result by 100%:

(Actual Change ÷ Original Amount) * 100% = 5/30 * 100% = 500%/30 = 16.7%

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