Question

The Maximum Retail Price (MRP) of a product is 55% above its manufacturing cost. The product is sold through a retailer, who earns 23% profit on his purchase price. What is the profit percentage (nearest integer) for the manufacturer who sells his product to the retailer? The retailer gives 10% discount on MRP.

• A. 31%
• B. 22%
• C. 15%
• D. 13%
• E. 11%

Hint:

Work step-by-step: First calculate final customer price, then backtrack retailer’s cost using profit percentage, and finally compute manufacturer’s margin.

Answer 1

The Correct Option is D

Step 1: Assume manufacturing cost.
Let the manufacturing cost (MC) = 100. Then, MRP = \(100 + 55 = 155\). Step 2: Selling price for retailer after discount.
Retailer sells at 10% discount on MRP: \[ \text{Selling Price (SP to customer)} = 155 \times (1 - 0.10) = 139.5 \] Step 3: Retailer’s cost price (purchase price from manufacturer).
Retailer earns 23% profit on his purchase price (CP). So, \[ 139.5 = CP \times (1 + 0.23) = 1.23 \times CP \] \[ CP = \frac{139.5}{1.23} = 113.41 \] Step 4: Manufacturer’s profit.
Manufacturer’s cost = 100, Selling price to retailer = 113.41. \[ \text{Profit} = 113.41 - 100 = 13.41 \] \[ \text{Profit %} = \frac{13.41}{100} \times 100 = 13.41% \approx 13% \] \[ \boxed{13%} \]