Question
Find the cost of manufacturing each article if a
manufacturer estimates that on inspection 12% of the articles he produces will be rejected. He accepts an order to supply 80,000 articles at Rs. 8 each. He estimates the profit on his outlay including the manufacturing of rejected articles to be 10%.Solution
If 100 articles are manufactured then 12 will be rejected Total selling price of 88 articles = 88 × 8 = 704 Total cost price = (704 × 100)/110 = 640 cost of manufacturing per article = 640/100 = Rs 6.40
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