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A company knows that on an average 10% of the produced pens are always defective so are rejected before packing. Company promises to deliver 7200 pens to its wholesaler at Rs. 10 each. It estimates overall profit on all the manufactured pens to be 25%. What is the manufacturing cost of each pen?

A company knows that on an average 10% of the produced pens are always defective so are rejected before packing. Company promises to deliver 7200 pens to its wholesaler at Rs. 10 each. It estimates overall profit on all the manufactured pens to be 25%. What is the manufacturing cost of each pen? Correct Answer Rs. 7.2

The correct answer is option 2 i.e. Rs. 7.2

90% of the pens = Rs. 7200

Total pens = 7200 × 100/90 = Rs. 8000

Selling price of 7200 pen = Rs. 72000

⇒ 125% = 72000

(∵ profit = 25%)

⇒ Cost price (100%) = 72000 × 100/125 = Rs. 57600

Cost price of 8000 pen = Rs. 57600

⇒ Cost price of 1 pen = 57600/8000 = Rs. 7.2

∴ The manufacturing cost of each pen is Rs. 7.2

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