A manufacturer makes a profit of 30% on cost after allowing 35% as trade discount. If the discount of production rises by 20%,what should be the reduced rate of trade discount so that the list price remains the same and the percentage profit also remains the same ?
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Profit percentage = 8%
Step-by-step explanation:
Given: A manufacturer makes a profit of 30% on cost after allowing 35% as trade discount.
Find: If the discount of production rises by 20%, what should be the reduced rate of trade discount so that the list price remains the same and the percentage profit also remains the same
Solution:
Let x denote the cost price of the goods.
Marked price of the goods = x + (35% of x) = x + 0.35x = 1.35x
Selling price = MP - Discount
Discount = 20% of 1.35x = 1.35x × 0.2 = 0.27x
So SP = 1.35x - 0.27x
SP = 1.08x
We find that SP is more than CP by 0.08x. That will be the profit.
Profit percentage = (Profit / CP) x 100
= (0.08x / x) * 100
= 8%
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