A wholesaler sells a packet of tea to a retailer at a profit of 20%. The retailer then marks up the price by 50% and offers a discount of 20% to the customer. If the customer pays Rs. 480, find the cost price of the packet for the wholesaler.

Correct — C.
Work backwards from the customer's price, dividing at each step.

Customer pays 80% of the marked price: MP = 480 ÷ 0.8 = 600
Marked price is 150% of the retailer's cost: 600 ÷ 1.5 = 400
Retailer's cost is 120% of the wholesaler's cost: 400 ÷ 1.2 = 333.33

Wholesaler's cost price = Rs. 333.33 → option (c)

Why the others are wrong

• (a)
  Rs. 300.33 — Rs. 300.33 is too low. The chain multiplies cost by 1.2 × 1.5 × 0.8 = 1.44, and 300.33 × 1.44 ≈ 432.5, short of the Rs. 480 paid.
• (b)
  Rs. 320.26 — Rs. 320.26 is also too low: 320.26 × 1.44 ≈ 461.2 at the customer's end, not the Rs. 480 the question states.
• (d)
  Rs. 340.26 — Rs. 340.26 overshoots: 340.26 × 1.44 ≈ 490, above the Rs. 480 the customer pays.

A price chain is a product of multipliers. A 20% profit multiplies by 1.2, a 50% mark-up by 1.5, a 20% discount by 0.8.

Combined: 1.2 × 1.5 × 0.8 = 1.44. So the customer's price = 1.44 × the wholesaler's cost, and cost = 480 ÷ 1.44 = 333.33.

Going backwards, divide by each multiplier. Each percentage was taken on an earlier price, so subtracting it from a later price gives the wrong figure.

Key facts

• A 20% profit on cost: selling price = 1.2 × cost
• A 50% mark-up then a 20% discount nets 1.5 × 0.8 = 1.2, a 20% profit for the retailer
• Reverse a percentage step by dividing by its multiplier, not by subtracting the percentage
• 1.2 × 1.5 × 0.8 = 1.44

Common traps

• Taking 20% off Rs. 480 (giving 384) instead of dividing by 0.8 (giving 600)
• Undoing the wholesaler's profit as 400 − 20% of 400 = 320 instead of 400 ÷ 1.2

No directly related past PYQ was found.