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Q: If the labour cost 20% of the cost of production and raw material cost 10% of the cost of production and the price on which article is sold is 20% above the cost of production. If the price of labour is increased by 40% and the price of raw material increased by 20% and rest other expenditure of cost remain constant. The industry thus decide to increase the selling price by 10%. Find the new profit percent  ?

  • 1
    18%
  • 2
    20%
  • 3
    22%
  • 4
    24%
  • Show Answer
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Answer : 2. "20%"
Explanation :

Answer: B) 20% Explanation: Let the Cost of Production of the article = 100 Then, Labour Cost = 20 Raw Material = 10 Other Expenditure = 100 - 10 – 20 = 70 Selling Price of the article  = 120 After increasing Labour and Raw material cost by 40% & 20% respectively, New Labour cost = 28 New Raw material cost = 12 New Cost of Production = 70 + 28 + 12 = 110 Then, New SP = 110% of 120 = 120 x 110/100 = 132 => New Gain = 132 - 110 = 22 => New Profit % = 22 x 100/110 = 20%

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