Instructions

The graph given below gives the yearly details of money invested in producing a certain product over the years 1991 to 1995. It also gives the profit (in ‘000 rupees).

Question 17

If the interest component is not included in the total cost calculation, which year would show the maximum profit per unit cost?

Solution

Ratio in 1991 = $$\frac{10}{120}$$ = 0.833

Ratio in 1992 = $$\frac{25}{125}$$ = 0.2

Ratio in 1993 = $$\frac{20}{145}$$ = 0.138

Ratio in 1995 = $$\frac{20}{160}$$ = 0.125

1992 has maximum profit per unit cost.

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If the interest component is not included in the total cost calculation, which year would show the maximum profit per unit cost?

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