# A goods producer estimates that on inspection 12% of the articles he p

| A goods producer estimates that on inspection 12% of the articles he produces will be rejected. He accepts an order to supply 44,000 articles at Rs. 8.25 each. He estimates the profit on his outlay including the manufacturing of rejected articles, to be 20%. Find the cost of manufacturing each article.

A. 6.875

B. 6.55

C. 6.50

D. 6.05

### Right Answer is: D

#### SOLUTION

To supply 44000 articles, the producer needs to produce 50000 articles (44000/88%)

So he will cover for the cost price of 50000 articles

Now, let the cost price of each article be x.

Cost price of 50000 articles = 50000x

So, selling price = 50000x + (50000x 20%) = 60000x

This selling price is equal to the selling price of 44000 articles at Rs. 8.25 each

44000 × 8.25 = 60000x

363000 = 60000x

x = 363000/6000 = 6.05

Hence the cost price of each article should be Rs. 6.05

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A goods producer estimates that on inspection 12% of the articles he p