Question 7

The cost of setting up a utility bag factory is Rs. 1200. The cost of running the factory is Rs. 125 per 105 bags. The cost of raw material is 80 paise/per bag. The bag are old at Rs. 3.25 each. 900 bags were made, but only 785 bags were sold. Other companies can advertise on both sides of the bag. What is the approximate sum to be obtained from the advertisements being printed on the bags, to give a profit of 12%?

Solution

It is given that 900 bags were made, and only 785 were sold.

Cost of manufacturing 900 bags $$=1200+\frac{125}{105}\times\ 900+0.80\times\ 900$$ $$=\ Rs. \frac{20940}{7}$$.....(1)

Revenue of the factory = Amount from sales + Amount from advertisements......(2)

Let the amount from advertisements be $$ Rs. 'y'$$

Amount from sales = $$785\times\ 3.25= Rs. 2551.25$$

Factory's profit percentage = 12%.....(3)

From Eq (1), (2) & (3)

We get, $$2551.25\ +y=\frac{20940}{7}\ \times\ 1.12$$

On solving, we get $$y=Rs.\ 799.15$$

Hence the approximate revenue from advertisements is = $$Rs.\ 799$$

Option (C) is the answer.


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