A manufacturer announces a trade discount of 30% on his products for his dealers. One of the dealers purchased 6 smart phones manufactured by the company at the rate of Rs.25,000 each. What is the amount of trade discount?
- (a)Rs.55,000
- (b)Rs.45,000
- (c)Rs.50,000
- (d)Rs.1,05,000
Answer
Why
Correct — B. A trade discount is a percentage off the list value, and the list value is what the six phones are rated at.
List value = 6 × 25,000 = ₹1,50,000
Discount = 30% of 1,50,000
= 0.30 × 1,50,000 = ₹45,000
The stem asks for the discount, not the bill: 1,50,000 − 45,000 = ₹1,05,000 would be the amount payable. The discount is ₹45,000 → option (b).
Why the others are wrong
- (a)Rs.55,000 — ₹55,000 is 36⅔% of the ₹1,50,000 list value. No rate in the question produces it — the announced trade discount is 30%.
- (c)Rs.50,000 — ₹50,000 is a third of ₹1,50,000, that is 33⅓% rather than the announced 30%. The gap between the two rates is ₹5,000 on this bill.
- (d)Rs.1,05,000 — ₹1,05,000 is what the dealer pays after the discount, 70% of ₹1,50,000. The question asks for the discount, which is the other 30%.
Concept
A trade discount is the reduction a manufacturer allows a dealer off the list price, before any cash discount or retail mark-up.
It is worked like any percentage: discount = rate × list value, and payable = list value − discount. Both numbers are natural answers, so the only thing that matters is which one the stem asked for.
Here the list value is 6 phones at ₹25,000 = ₹1,50,000, and 30% of that is ₹45,000. Per phone the discount is ₹7,500, and 6 × 7,500 = ₹45,000 — a useful check on the arithmetic.
Nothing in the stem asks about the dealer's own selling price or profit, so the 30% is applied once and the question ends there.
Key facts
- Trade discount = discount rate × list price, deducted before the dealer resells.
- 30% of ₹1,50,000 is ₹45,000, which leaves ₹1,05,000 payable.
- A percentage of a total equals the same percentage per unit times the number of units, so 30% of ₹25,000 is ₹7,500 and six of those is ₹45,000.
Study next
Common traps
- Answering the amount payable, ₹1,05,000, when the question asked for the discount
- Applying the 30% to one phone and forgetting the other five
- Treating ₹25,000 as a price after discount and grossing it up instead
SSC asks either for the discount in rupees or for the price after it, from the same two numbers, so the last line of the stem decides the answer.
Also asked 12 Sep 2024, 12:30, Quant Q.3 (marked price ₹180, 15% discount, the discount in ₹) and 26 Sep 2024, 12:30, Quant Q.4 (₹15,620 at 27% off, the price the customer pays).
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