In a manufacturing unit , it was noted that the price of raw material has increased by 25% and the labour cost has gone up from 30% of the cost of raw material to 38% of the cost of raw material. What percentage of the consumption of raw material be reduced to keep the cost the same - as that before the increased ?
Show answer & explanation
Correct answer: D
Explanation
The correct answer is option 4 i.e. 24.6%
Solution :
Let the cost price of the raw material be Rs. x
The new cost of raw material = Rs. 125x/100
The cost of labour = 130x/100
The new cost of labour = (125x/100) × (138/100)
The reduction in consumption = [(125x/100) × (138/100)] - 130x/100 = 4250x/10000
The percentage reduction = [4250x/10000]/[(125x/100) × (138/100)] × 100
= (4250x/10000) × (100/125x) × (100/138) × 100
= 1700/69 = 24.6%