Textile Engineering > GATE 2013 > Profit and Loss
A firm is selling its product at Rs. 60 per unit. The total cost of production is Rs. 100 and firm is earning total profit of Rs. 500. Later, the total cost increased by 30%. By what percentage the price should be increased to maintained the same profit level?
Correct : a
Selling Price per unit = ₹60
Total Cost = ₹100
Total Profit = ₹500
Total Revenue = Total Cost + Total Profit
Total Revenue = 100 + 500 = ₹600
Number of units = Total Revenue ÷ Price per unit
Number of units = 600 ÷ 60 = 10 units
New Total Cost after 30% increase = 100 × 1.30 = ₹130
To maintain same profit of ₹500:
New Total Revenue = New Total Cost + Profit
New Total Revenue = 130 + 500 = ₹630
New Price per unit = 630 ÷ 10 = ₹63
Increase in price = 63 − 60 = ₹3
Price increase% = (3 ÷ 60) × 100 = 5%
The price should be increased by 5% (Option A)
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