Question : A merchant marked the price of an article by increasing its production cost by 40%. Now he allows a 20% discount and gets a profit of Rs. 48 after selling it. The production cost is:
Option 1: Rs. 320
Option 2: Rs. 360
Option 3: Rs. 400
Option 4: Rs. 440
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Correct Answer: Rs. 400
Solution :
Let the production cost of the article be Rs. $y$.
Here, $a$ = 40%, $b$ = –20%
Effective percentage = $a+b+\frac{ab}{100}$%
$\therefore$ Effective percentage = $40 − 20 −\frac{40\times 20}{100}$%
= (20 – 8)% = 12%
According to the question,
12% of $y$ = 48
⇒ $y$ = $\frac{48 \times 100}{12}$ = Rs. 400
Hence, the correct answer is Rs. 400.
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