For seven companies A–G: percent of total production cost, I:II production cost ratio, and profit % on items I and II. Total production cost = Rs 50 crore.
| Company | Cost (%) | I:II | Profit I (%) | Profit II (%) |
|---|---|---|---|---|
| A | 15 | 2:3 | 25 | 20 |
| B | 11 | 3:2 | 32 | 35 |
| C | 22 | 4:1 | 20 | 22 |
| D | 8 | 3:5 | 15 | 25 |
| E | 27 | 5:3 | 28 | 30 |
| F | 5 | 1:4 | 35 | 25 |
| G | 12 | 1:2 | 30 | 24 |
What is the amount of profit earned by Company D on item II?
ARs. 6.25 crores
BRs. 1.25 crores
CRs. 6.25 lakhs
DRs. 62.5 lakhs ✓ Correct
Correct answer: (D) Rs. 62.5 lakhs
Explanation
The profit of Company D on item II is Rs. 62.5 lakhs.
Company D holds 8 percent of 50 crores, which is 4 crores of total cost.
Its items I and II are in the ratio 3 to 5, so item II is 4 crores times 5 by 8.
This gives an item II cost of 2.5 crores.
The profit rate on item II for Company D is 25 percent.
So the profit is 25 percent of 2.5 crores, which is 62.5 lakhs.
Profit is computed on the item cost after splitting the company total by the ratio.
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