Two-stage resale chain in retail: a wholesaler sells toys to a retailer at a 20% profit on the wholesaler's cost, and the retailer then sells these toys to customers at a 25% profit on the retailer's own cost. Determine the retailer's profit percentage (with respect to the retailer's cost), independent of the wholesaler's margin.

Introduction:This problem separates margins at different stages in a supply chain. The retailer’s profit percentage is always calculated on the retailer’s own cost, regardless of the wholesaler’s prior profit.

Given Data / Assumptions:

• Wholesaler → Retailer at 20% profit (affects retailer's purchase price).
• Retailer → Customer at 25% profit (on retailer's cost).
• Profit% is always with respect to the seller's own cost.

Concept / Approach:Retailer's profit% = (retailer SP − retailer CP) / (retailer CP) * 100. The wholesaler’s margin only sets the retailer’s CP; it does not change the definition of the retailer’s percentage.

Step-by-Step Solution:Let the retailer's cost (from wholesaler) = RRetailer sells at 25% profit ⇒ SP = R * 1.25Retailer's profit% = (1.25R − R)/R * 100 = 25%

Verification / Alternative check:Try numbers: if R = 100, then SP = 125. Profit = 25, which is 25% of 100.

Why Other Options Are Wrong:

• 5% / 20%: confuse or average margins across stages.
• 80%: not supported by any base change here.

Common Pitfalls:

• Averaging 20% and 25% or compounding them on the wrong base.

Final Answer:25%