Question

The cost of production of a cordless phone set in
2011 is 900, divided between material, labour and
overheads in the ratio 3:4:2. If the cordless phone
set is marked at a price that gives a 20% profit on
the component of price accounted for by labour, what
is the marked price of the set?​

Answer 1

Given:

Cost of production of phone= Rs.900

The ratio of costs of material, labor, and overheads= 3:4:2

The profit on labor's component=20%

To find:

The marked price of the phone set

Solution:

We can find the price by following the steps given below-

We know that the profit is calculated on the cost price of the component.

The cost of producing the set= Rs. 900

The cost of material, labor, and overheads is in the ratio of 3:4:2

The cost of material=3×900/9

= Rs.300

The cost of labor=4×900/9

= Rs.400

The cost of overheads=2×900/9

= Rs.200

Now, the profit is on the labor component=20% of Rs.400

=20×400/100

=Rs. 80

The selling price of the component accounted for labor= Cost price+ profit

=400+80= Rs. 480

There is no profit on other components, so the marked price will be

= Cost of material+ cost of labor+ cost of overheads+ profit on labor

= 300+400+200+80

= Rs. 980

Therefore, the marked price of the set is Rs. 980.

Answer 2

Given:

Cost of production of phone$= Rs.900$

The ratio of costs of material, labor, and overheads$= 3:4:2$

The profit on labor's component $=20$%

To find: The marked price of the phone set

Solution:

We can find the price by following the steps given below-

We know that the profit is calculated on the cost price of the component.

The cost of producing the set$= Rs. 900$

The cost of material, labor, and overheads is in the ratio of $3:4:2$

The cost of material$=3\times 900/9$

$= Rs.300$

The cost of labor$=4\times 900/9$

$= Rs.400$

The cost of overheads$=2\times 900/9$

$= Rs.200$

Now, the profit is on the labor component$=20%$ %of Rs.400

$=20\times 400/100\\=Rs. 80$

The selling price of the component accounted for labor= Cost price+ profit

$=400+80\\= Rs. 480$

There is no profit on other components, so the marked price will be

= Cost of material+ cost of labor+ cost of overheads+ profit on labor

$= 300+400+200+80\\= Rs. 980$

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