Instructions

Answer the questions based on the following information. A watch dealer incurs an expense of Rs. 150 for producing every watch. He also incurs an additional expenditure of Rs. 30,000, which is independent of the number of watches produced If he is able to sell a watch during the season, he sells it for Rs. 250. If he fails to do so, he has to sell each watch for Rs. 100.

Question 20

# If he is able to sell only 1,200 out of 1,500 watches he has made in the season (and the rest 300 are sold out of season), then he has made a profit of

Solution

Cost price per watch = 150
Cost price for 1500 watches = $$1500 \times 150$$ = 225000
Total expense = 225000 + 30000 = 255000
Selling price for season = $$1200 \times 250$$ = 300000
For out of season = $$300 \times 100$$ = 30000
Total selling = 300000 + 30000 = 330000
Profit = 330000 - 255000 = 75000

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