Practicing Success

Target Exam

CUET

Subject

Entrepreneurship

Chapter

Business Arithmetic

Question:

If a company has incurred expenses of Rs. 10,000 and it wants a profit margin of 20% on cost, at what rate will a company sell its product?

Options:

10,000

12,000

11,000

6,000

Correct Answer:

12,000

Explanation:

To achieve a 20% profit margin on the cost of Rs. 10,000, you need to add 20% of the cost to the cost itself to determine the selling price.

Profit Margin = 20% of Cost Profit Margin = 0.20 * Rs. 10,000 Profit Margin = Rs. 2,000

Now, to find the selling price, you add the profit margin to the cost:

Selling Price = Cost + Profit Margin Selling Price = Rs. 10,000 + Rs. 2,000 Selling Price = Rs. 12,000

So, the company should sell its product at a rate of Rs. 12,000 to achieve a 20% profit margin on the cost of Rs. 10,000.