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    Question

    Find the cost of manufacturing each article if a

    manufacturer estimates that on inspection 16% of the articles he produces will be rejected. He accepts an order to supply 45,000 articles at Rs. 7.5 each. He estimates the profit on his outlay including the manufacturing of rejected articles, to be 20%.
    A Rs 5.50 Correct Answer Incorrect Answer
    B Rs 5.30 Correct Answer Incorrect Answer
    C Rs 5.25 Correct Answer Incorrect Answer
    D Rs 4.30 Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    If 100 articles are manufactured then 16 will be rejected
    Total selling price of 84 articles = 84 × 7.5 = 630
    Total cost price = (630 x 100)/120 = 525
    cost of manufacturing per article = 525/100 = Rs 5.25

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