Discussion
A product costing ₹60 per unit to produce had been selling at the average rate of 1200 units per month. After the product was improved, sales increased to an average of 2000 units per month. However, the new product cost five percent more to produce. If the manufacturer's selling price in each instance was ₹ 75 per unit, what was the manufacturer's added profit per month with the newer product?
Answer: B
The added profit is ₹6,000 per month.
Old product: profit per unit = 75 - 60 = ₹15, so monthly profit = 15 × 1200 = ₹18,000.
New product: cost = 60 × 1.05 = ₹63, profit per unit = 75 - 63 = ₹12, so monthly profit = 12 × 2000 = ₹24,000.
Added profit = 24,000 - 18,000 = ₹6,000.
₹12,000 would be the result of ignoring the 5% cost rise (15 × 800 extra units), and ₹9,000 and ₹4,000 do not follow from either version of the calculation.
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