CA Inter P4 · Chapter 6 · Question 6 of 9
Cost of sales of a product is ₹8,40,000. The company wants to earn a profit of 20% on sales. The selling price should be:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) ₹10,50,000
Explanation
If profit is 20% of sales, cost is 80% of sales. Sales = ₹8,40,000 / 0.80 = ₹10,50,000, and profit = ₹2,10,000, which is 20% of ₹10,50,000. Adding 20% to cost (₹10,08,000) gives a profit of only 16.67% on sales.
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