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 22,000 articles at Rs. 7.50 each. He estimates the profit on his outlay including the manufacturing of rejected articles, to be 20%.
    A Rs 5.5 Correct Answer Incorrect Answer
    B Rs 5.3 Correct Answer Incorrect Answer
    C Rs 5 Correct Answer Incorrect Answer
    D Rs 5.9 Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    If 100 articles are manufactured then 12 will be rejected
    Total selling price of 88 articles = 88 × 7.5 = 660
    Total cost price = (660 x 100)/120 = 550
    cost of manufacturing per article = 550/100 = Rs 5.5

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