Question
Download Solution PDFComprehension
The following table shows the details of seven companies (A-G) about
(i) The percentage cost distribution of production of two items I and II,
(ii) Ratio of cost of production between items I and II, and
(iii) Percentage profit earned for the items I and II.
Cost of the production (both items together) by seven companies is Rs. 50 crores.
In accordance with the data in the table, answer the questions:
Company-wise Distribution of Production Cost and Profit
|
Company |
Percentage Cost of Production of Item I and Item II |
Ratio of Production Cost |
Percentage Profit Earned |
||
|
Item I |
Item II |
Item I |
Item 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?
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFFormula Used:
Profit earned on Item II by Company D =
(Percentage profit earned on Item II by Company D / 100) x (Cost of production of Item II by Company D / Total cost of production of both items by Company D)
Profit earned on Item II by Company D = (25 / 100) x (5/8) x (8/100) × 50 crores
⇒ 0.25 x 0.625 x 0.08 × 50 crores
⇒ Rs. 62.5 lakhs
Therefore, the correct answer is that the profit earned by Company D on Item II is Rs. 62.5 lakhs.
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