The manufacturer of a table sells it to a wholesale dealer at a profit of . The wholesale dealer sells the table to a retailer at a profit of . Finally, the retailer sells it to a customer at a profit of . If the customer pays Rs for the table, then its manufacturing cost (in Rs) is
The manufacturer of a table sells it to a wholesale dealer at a profit of . The wholesale dealer sells the table to a retailer at a profit of . Finally, the retailer sells it to a customer at a profit of . If the customer pays Rs for the table, then its manufacturing cost (in Rs) is
Solution
When we make a 10% profit, we sell for 110% of what we paid. This means we multiply by 1.1 (since 110% = 1.1).
Similarly:
30% profit → multiply by 1.3 (130% = 1.3)
50% profit → multiply by 1.5 (150% = 1.5)
Let the manufacturing cost be Rs. .
Manufacturer → Wholesale Dealer
Manufacturer sells at 10% profit
Wholesale dealer pays:
Wholesale Dealer → Retailer
Wholesale dealer sells at 30% profit on what he paid
Retailer pays:
Retailer → Customer
Retailer sells at 50% profit on what he paid
Customer pays:
We know the customer paid Rs. 4290, so:
Therefore, the manufacturing cost is Rs. 2000.
Key Takeaway: In chain profit problems, we multiply all the profit multipliers together. Here: , which directly gives us the relationship between manufacturing cost and final selling price.