An electronics store orders 150 portable speakers at a cost of ₹400 each. The owner plans to price them so that selling only 120 speakers would guarantee a 40% profit on the total investment. However, a local event leads to the sale of 135 speakers. If the remaining speakers have no resale value, calculate the store’s actual profit percentage on the total investment.
- (a)52.2%
- (b)53.5%
- (c)62.8%
- (d)57.5%
Answer
Why
Correct — D. The profit is measured on the total investment, so all 150 speakers count as cost.
Total cost = 150 × ₹400 = ₹60,000
Target revenue from 120 = 140% of ₹60,000 = ₹84,000
Price per speaker = ₹84,000 ÷ 120 = ₹700
Actual revenue = 135 × ₹700 = ₹94,500
Profit = ₹94,500 − ₹60,000 = ₹34,500
Profit % = 34,500 ÷ 60,000 × 100 = 57.5% → option (d)
Why the others are wrong
- (a)52.2% — 52.2% of ₹60,000 is ₹31,320, which needs revenue of ₹91,320, about ₹676 a speaker. The price was fixed at ₹700, so 135 sales bring ₹94,500.
- (b)53.5% — 53.5% needs revenue of ₹92,100, about ₹682 a speaker. At ₹700 each, 135 sales bring ₹94,500, which is 57.5% above the ₹60,000 cost.
- (c)62.8% — 62.8% needs revenue of ₹97,680, more than 135 × ₹700 = ₹94,500 can supply. The profit is ₹34,500 on ₹60,000, which is 57.5%.
Concept
The selling price is fixed before the sales happen. The owner wants 120 sales to return cost plus 40%, and that sets the price at ₹700.
Once the price is fixed, the profit depends only on how many units sell. Each extra sale adds ₹700 of revenue, while the ₹60,000 cost stays the same, sold or not.
Ratio shortcut: revenue scales with units sold, so actual revenue = 1.4 × 135⁄120 = 1.575 × cost, a 57.5% profit.
The stem says the leftover speakers have no resale value, so the 15 unsold units add nothing to revenue, but their ₹6,000 cost stays in the base.
Key facts
- Profit % on investment = (revenue − total cost) ÷ total cost × 100.
- Unsold stock with no resale value adds to the cost but not to the revenue.
- At a fixed price, revenue is proportional to units sold: 135⁄120 = 1.125.
Study next
Common traps
- Scaling the 40% instead of the 140%: 40% × 135⁄120 = 45% forgets that the revenue, not the profit, grows with sales.
- Pricing for 40% on the 120 speakers' own cost (₹48,000) instead of the full ₹60,000: the price falls to ₹560 and the profit to 26%.
- Taking the cost of only the 135 speakers sold (₹54,000) as the base: that gives 75%, but the question asks for profit on the total investment.
The same rule, that spoiled stock keeps its cost while earning nothing, drives 17 Sep 2024, 09:00, Quant Q.19: 1⁄5 of the sugar is damaged and the rest must be repriced to ₹52.5 a kg for a 5% profit on the whole.
Related PYQs
No directly related past PYQ was found.