Expert: Pawan Musale - 8/18/2009

Question
a manufacturer makes 750 articles at a cost of Rs.0.60 per article.he fixes the selling price such that if only 600 articles are sold he would make a profit of 40% on his outlay.find his actual profit profit and loss %,if he could sell:
1. 630 articles
2. 560 articles

Answer
Shruti,

Nice question. :) Let us solve this.

Manufacturing cost of one article is 0.60. Total articles manufactured are 750.

Hence total manufactuirng cost (MC) = 750 * 0.60

Hence MC = 450 ---------------------------------------------------- #1

Now, his profit target is 40%. So let us first calculate the profit amount (P) he wants to earn.

This profit is on the MC. Now 40 % profit means he will earn 140 for each 100 units of amount.

Put this in the following table format:

                                      MC          Selling cost
                                      100             140
                                      450               x

x is the total selling cost which will give him 40% profit.

To solve this, cross multiply the items in table and then equate the results as:

100 * x = 450 * 140
x = 450 * 140 / 100
x = 630

This means that he should sell his articles at total cost of 630 and then only he will get 40% profit.

Total Selling Cost to gain 40% profit = 630 -------------------------- #2

Now he has considered this profit for sell of 600 articles. Hence selling cost (SC) of each article would be,

                                Selling cost          Articles
                                   630                   600
                                    SC                    1

This table means, 630 is the cost for 600 articles, so SC is the cost for 1 item.

Cross multiplying,

630 * 1= SC * 600
SC = 630/600
SC = 1.05  -------------------------------------------------- #3

So selling cost of each article is now 1.05

Now question 1:

He sells 630 articles.

So total selling cost is 630 * 1.05 = 661.5

Now from statement #1 above, his manufacturing cost is 450 and selling cost is 661.5. So he is in profit.

His profit is 661.5 - 450 = 211.5

So he has got profit of 211.5 on sell of 450. Let us put it in table format:

                            Selling amount          Profit
                                   450              211.5
                                   100                 p

p is the profit earned on sell of 100. In short p is % profit.

Cross multiplying,

450 * p = 100 * 211.5

p = 100 * 211.5 / 450
p = 47

Means his profit is 47% ---------------------------------------- #4


Now question 2:

He sells 560 articles.

So total selling cost is 560 * 1.05 = 588

Now from statement #1 above, his manufacturing cost is 450 and selling cost is 588/. So he is in profit.

His profit is 588 - 450 = 138

So he has got profit of 138 on sell of 450. Let us put it in table format:

                            Selling amount          Profit
                                   450              138
                                   100                 p

p is the profit earned on sell of 100. In short p is % profit.

Cross multiplying,

450 * p = 100 * 138

p = 100 * 138 / 450
p = 30.67

Means his profit is 30.67% ---------------------------------------- #5


So #4 and #5 are your answers.

I believe this solves your problem.

Please let me know if you need additional information.

All the best. :)

Regards,
Pawan