Anu fixes the selling price of an article at 25% above its cost of production. If the cost of production goes up by 20% and she raises the selling price by 10%, then her percentage profit is (correct to one decimal place):
Answer & explanation
Correct answer: option 2
Let cost price = 100
Selling price = 100 × \(\frac{5}{4}\) = Rs. 125
Profit = 125 – 100 = Rs. 25
New cost price = 100 × \(\frac{120}{100}\) = Rs. 120
New selling price = 125 × \(\frac{110}{100}\) = Rs. 137.5
New profit = 137.5 – 120 = 17.5
∴ Profit percentage = \(\frac{17.5}{129}\) × 100 = 14.6%