1. A small and medium enterprise imports two components A and B from Taiwan and China respectively and assembles them with other components to form a toy. Component A contributes to 10% of production cost. Component B contributes to 20% of the production cost. Usually the company sells this toy at 20% above the production cost. Due to increase in the raw material and labour cost in both the countries, component A became 20% costlier and component B became 40% costlier. Owing to these reasons the company increased its selling price by 15%. Considering that cost of other components does not change, what will be the profit percentage, if the toy is sold at the new price?
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By: anil on 05 May 2019 02.40 am
Let the production cost be Rs. 100
The, Selling Price = Rs. 120
Price of component A = Rs. 10
Price of component B = Rs. 20
Price of other components = Rs. (100 - 10 - 20) = Rs. 70 After increase in prices, Price of component A = Rs. 12
Price of component B = Rs. 28
Price of other components = Rs. 70
Total Cost of production = Rs. (12 + 28 + 70) = Rs. 110
Selling price = Rs. (1.15 * 120) = Rs. 138
Profit = Rs. 28
Profit % = 25.45%
Hence, option B is the correct answer.
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The, Selling Price = Rs. 120
Price of component A = Rs. 10
Price of component B = Rs. 20
Price of other components = Rs. (100 - 10 - 20) = Rs. 70 After increase in prices, Price of component A = Rs. 12
Price of component B = Rs. 28
Price of other components = Rs. 70
Total Cost of production = Rs. (12 + 28 + 70) = Rs. 110
Selling price = Rs. (1.15 * 120) = Rs. 138
Profit = Rs. 28
Profit % = 25.45%
Hence, option B is the correct answer.