A company manufactures pens. It makes a profit of INR 18.00 when it sells 100 pens to a local shop. The local shop, in turn, makes a profit of INR 4 on selling 50 pens at 80 paise per pen. How much did it cost the company to manufacture 100 pens?
Solution
Correct Answer: Option C
Company makes a profit of INR 18 when it sells 100 pens to local shop
∴ The S.P of company is the C.P of the local shop
The local shop makes a profit of INR 4 on selling 50 pens at 80 paise per pen.
∴ Revenue generated by local shop by selling 50 pens = 50 × 0.80 = INR 40
∵ the local shop makes a profit of INR 4, C.P. of 50 pens for the local shop = 40 – 4 = INR 36
∴ C.P. of 100 pens for the local shop = 2 × 36 = INR 72
⇒ the company sells 100 pens to the local shop at INR 72.
The company makes a profit on INR 18 on selling 100 pens to the local shop.
We know that, Profit = selling price – manufacturing price
∴ 18 = 72 – manufacturing price
⇒ Manufacturing price = 72 – 18 = 54
INR 54 is the cost price of the company to manufactures 100 pens.
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