Instructions

In the following multiple bar diagram, the data regarding cost of production and sales revenue of the company XYZ in the given years have been given. Study the bar diagram carefully and answer the questions.

Question 63

# If the sales revenues in the years 2005, 2006 and 2007 increase by 20%, 25% and 30% respectively and the costs of production in the years 2007, 2008 and 2009 increase by 20%, 25% and 35% respectively, what will be the difference between average sales revenue and average cost of production?

Solution

Increase in the sales revenue in the year :

2005 = $$\frac{120}{100}$$ * 725 = 870 k

2006 = $$\frac{125}{100}$$ * 550 = 687.5 k

2007 = $$\frac{130}{100}$$ * 600 = 780 k

=> Average Revenue = $$\frac{870 + 687.5 + 780}{3}$$ = 779.17 k

Increase in production cost in the year :

2007 = $$\frac{120}{100}$$ * 400 = 480 k

2008 = $$\frac{125}{100}$$ * 500 = 625 k

2009 = $$\frac{135}{100}$$ * 525 = 708.75 k

=> Average cost = $$\frac{480 + 625 + 708.75}{3}$$ = 604.58 k

$$\therefore$$ Required difference = 779.17k - 604.58k

= Rs. 174.59 thousand