Question

Profit on sale %=20%,profit on cost %=25% profit on sale

Answer 1

Explanation:

Whenever you get confused do the following. I still use this even after qualifying CA.

20%= 20/100 that's 1/5

Whenever it's on sales and you want to convert into cost, reduce one from the denominator so 1/5 on sales becomes 1/4 which will be on cost. This is a shortcut. Do the vice versa when you want to convert from cost to sale i.e add one in the denominator.

The logic is as follows:-let cost of a product X be 100

Cost + profit= sale price

Now we have to have consider 25%profit on cost. So 100+25%of100= sale price. Which is nothing but 100+25=125.

Now in your question you have 20% on sale

Rs 25 profit on 125 is nothing but 20% on sale

Hence proved 25%on cost=20% on sale!