Q64
The accountants of a company show sales of Rs. 12,600. The primary cost is 35% of sales and trading cost accounts for 25% of the gross profit. Gross profit is arrived at by excluding the primary cost plus the cost of advertising expenses of Rs. 1400, director's salary of Rs. 650 per annum plus 2% annual sales as miscellaneous costs. Find the percentage profit (approx) on a capital investment of Rs. 14,000?
A.
35%
B.
31%
AnswerC.
28%
D.
26%
E.
Cannot be determined
Answer: Option B
Solution
Answer: Option B
Solution:
Primary Cost:35% of 12600 = 4410
Miscellaneous costs:
2% of 12600 = 252
Gross Profit = 12600 - 4410 - 1400 - 650 - 252 = 5888
Trading Cost = 0.25 × 5888 = 1472
Hence, Net Profit = 4416
% Profit =
= 31.54%
≈ 31%