Percentage Q79

79.

A small and medium enterprise imports two components A and B from Taiwan and China respectively and assembles them with other components to form a toy. Component A contributes to 10% of production cost. Component B contributes to 20% of the production cost. Usually, the company sells this toy at 20% above the production cost. Due to increase in the raw material and labour cost in both the countries, Component A became 20% costlier and component B became 40% costlier. Owing to these reasons the company increased its selling price by 15%. Considering that cost of other components does not change, what will be the profit percentage, if the toy is sold at the new price?

	A.		15.5%
	B.		25.5%
	C.		35.5%
	D.		40%
		Answer – (B) Solution: Let the price of the products be 100. Then, the price of the components A and B will be 10 and 20 respectively. As the profit is 20%, the selling price = 120. Due to increase in the price of raw material, the new costs of components A and B will be 12 and 28 respectively. The new selling price =115% of 120=138 As, there is no change in the price of the other components, New cost of the products = 110. Thus, new profit =(28110)*100= 25.45%