Question

Two companies Lego and Hotwheels imports two components A and B from Japan and Tokyo respectively and
assembles them with other components to form a toy. Component A contributes to 10% of production cost
while component B contributes to 20% of production cost. Usually the company sells this toy at 20% above the
production cost. Due to increase in the raw material and labour cost in both the countries, component B
became 40% costlier. Owing to these reasons the company increased its selling price by 15%. Considering that
cost of other components does not change, what will be the profit percentage if the toy is sold at the new price?​

Answer 1

Step-by-step explanation:

Let the original cost of the toy be Rs. 100.

Then,

Original cost of component A

= 10% of Rs. 100

= Rs. 10

Original cost of component B

= 20% of Rs. 100

= Rs. 20

Original S.P. of the toy

= 120% of Rs. 100

= Rs. 120

New cost of component A

= 120% of Rs. 10

= Rs. 12

New cost of component B

= 140% of Rs. 20

= Rs. 28

New price of the toy

= Rs. [100 + (12 + 28) - (10 + 20)]

= Rs. 110

New S.P. of the toy

= 115% of Rs. 120

= Rs. 138

Profit = Rs. ( 138 - 110) = Rs. 28

∴Profit %=(28110×100)%=25.45%≈25.5%

Answer 2

Answer:

27.8 %

Solution:

Let the original production cost be Rs. 100.

Cost of component A = 10% of production cost

                                    = (10/100) × 100 = Rs. 10

Cost of component B = 20% of production cost

                                    = (20/100) × 100 = Rs. 20

Selling price of toy, S = 20% above the production cost

                                     = Production cost + 20% of production cost

                                     = Rs. 100 + [(20/100)×100]

                                     = Rs. 100 + Rs. 20 = Rs. 120

Now, Component B became 40% costlier.

Increase in production cost = Increase in cost of component B [It is given that cost of other components is same]

Increase in production cost = 40% of cost of component B

                                              = (40/100) × 20

                                              = Rs. 8

New production cost, CP = Rs. 100 + Rs. 8

                                          = Rs. 108

Increase in selling price = 15% of selling price

                                        = (15/100) × S = (15/100) × 120

                                        = Rs. 18

New selling price, SP = Rs. 120 + Rs. 18 = Rs. 138

Profit = SP - CP = Rs. 138 - Rs. 108 = Rs. 30

Profit % = (Profit/CP) × 100%

             = (30/108) × 100%

             = 0.278 × 100%

             = 27.8 %

Hence, Profit percentage will be 27.8 %.

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