A dealer fixed the price of an article 40% above the cost of production. While selling it he allows a discount of 20% and makes a profit of Rs. 72. Find the cost of production (in Rs.) of the article.
Show answer & explanation
Correct answer: C
Explanation
The Correct answer is option 3 i.e. Rs.600
Given that
A dealer fixed the price of an article 40% above the cost of production.
Discount = 20%
Profit = Rs. 72
Let the cost of production be 100 units
Marked price = 100 + 40 = 140 units
Formula used
Selling price = Marked price × (100 - D)/100
Calculation
Selling price = 140 × (100 - 20)/100 = (140 × 80)/100 = 112 units
As we know,
Profit = S.P. - C.P.
⇒ 112 units - 100 units = Rs. 72
⇒ 12 units = 72
⇒ 100 units = (72/12) × 100 = Rs. 600
Hence, the cost of the production is Rs. 600