In this question, the retailer's profit or loss as a percentage doesn't hinge on the $30 directly. He ends up selling 80% at 120% of the cost, the question asks us to assume. And he gets 40% of the cost as a refund on the other 20%.
So, for the revenue, we can consider the cost 1 and construct a weighted average:

revenue= ( 0.8 )( 1.2 )+( 0.2 )( 0.4 ) = 0.96+0.08 = 1.04 The "cost" is just 1, so the dealer has made a 4% profit.


The correct answer is (C).