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 A product costing 60 paise per unit to produce had been selling at the average rate of 1200 units per month. After the product was improved, sales increased to an average of 2000 units per month. However, the new product cost five percent more to produce. If the manufacturer's selling price in each instance was 75 paise per unit, what was the manufacturer's added profit per month with the newer product?

 A product costing 60 paise per unit to produce had been selling at the average rate of 1200 units per month. After the product was improved, sales increased to an average of 2000 units per month. However, the new product cost five percent more to produce. If the manufacturer's selling price in each instance was 75 paise per unit, what was the manufacturer's added profit per month with the newer product? Correct Answer Rs.60

Given:

A product costing 60 paise per unit to produce had been selling at the average rate of 1200 units per month.

After the product was improved, sales increased to an average of 2000 units per month.

The manufacturer's selling price in each instance was 75 paise per unit.

Calculation:

Before improvement,

Cost of manufacturing 1 piece = 60 paise

Total units produced per month = 1,200

Total cost of production = 0.60 × 1,200= 720

Selling Price of 1 piece = 75 paise

Total revenue = 0.75 × 1,200 = 900,

Total profit = 900 - 720 = Rs.180

After improvement,

Cost of manufacturing 1 piece = 60 + ( 60 ×  5%) paise = 63 paise

Total units produced per month = 2,000

Total cost of production = 0.75 × 2,000 = 1,260

Selling Price of 1 piece = 75 paise

Total revenue = 0.75 × 2,000 = 1,500

Total profit = 1,500 - 1,260 = 240

The added profit per month with the newer product = 240 - 180 = Rs.60

∴ The added profit per month with the newer product is Rs.60.

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