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      Question

      Find the cost of manufacturing each article if a

      manufacturer estimates that on inspection 13% of the articles he produces will be rejected. He accepts an order to supply 25,000 articles at Rs. 6 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 4.35 Correct Answer Incorrect Answer
      E None of these Correct Answer Incorrect Answer

      Solution

      If 100 articles are manufactured then 13 will be rejected
      Total selling price of 87 articles = 87 × 6 = 522
      Total cost price = (522 x 100)/120 = 435
      cost of manufacturing per article = 435/100 = Rs 4.35

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