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The price of raw materials has gone up by 15%, labor cost has also increased from 25% of the cost of raw material to 30% of the cost of raw material. By how much percentage should there be reduction in the usage of raw materials so as to keep the cost same?

The price of raw materials has gone up by 15%, labor cost has also increased from 25% of the cost of raw material to 30% of the cost of raw material. By how much percentage should there be reduction in the usage of raw materials so as to keep the cost same? Correct Answer 17%

Let the initial cost of raw material be 100. So, initial labor cost was 25 and net cost was 125Now,15% increment in raw materials cost and labor cost has gone up to 30% from 25 %Raw material cost = 115 AndLabor cost = (115 × 30%) = 34.5So, New net cost,= 115 + 34.5 = 149.5Difference of labor cost = 149.5 - 125 = 24.5% reduction = $$\frac{{24.5 \times 100}}{{149.5}}$$   = 17%(approx.)

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