Question 27
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Rotomac produces very fine quality of writing pens. Company knows that on average 10% of the produced pens are always defective so are rejected before packing. Company promises to deliver 7200 pens to its wholesaler at ₹ 10 each. It estimates the overall profit on all the manufactured pens to be 25%. What is the manufacturing cost of each pen?
- A ₹ 6
- B ₹ 7.2 Correct
- C ₹ 5.6
- D ₹ 8
Correct Answer: Option B
You must know that the company is able to deliver only 90% of manufactured pens. So let k be the manufacturing price of a pen
Then,
Total income (including 25% profit) = 8000 x k x 1.25
Also this same income is obtained by selling 90% manufactured at ₹10 which is equal to 7200 x 10.
8000 x K x 1.2 = 7200 x 10
K = ₹ 7.2 ( 90% of 8000 = 7200)
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