Question

What is the maximum current gain possible?

• A. 10%
• B. 12.5%
• C. 0%
• D. 7.5%

Hint:

When calculating the maximum possible gain in cases with constraints, always use the given limits (such as the 10% increase in the selling price) to find the maximum gain.

Answer 1

The Correct Option is A

We are given that the current gain is 20%, and components A and B form 30% and 50% of the total production cost respectively. The cost of the German mark increased by 30%, and the cost of the USA dollar increased by 22%. Due to market conditions, the selling price cannot be increased beyond 10%. - Let the total production cost be \( P \). - The cost of component A is \( 0.3P \), and the cost of component B is \( 0.5P \). - The selling price cannot be increased beyond 10%. After the changes: - The new cost of A becomes \( 1.3 \times 0.3P = 0.39P \). - The new cost of B becomes \( 1.22 \times 0.5P = 0.61P \). Therefore, the total new cost is: \[ \text{New total cost} = 0.39P + 0.61P = P. \] Since the selling price cannot be increased beyond 10%, the maximum gain is 10% of the original cost. Hence, the maximum gain possible is 10%.