A textile firm sells a designer saree for Rs. 500. The total cost incurred per saree is Rs. 350. Calculate the profit percentage and state whether the selling price is above a 30% markup on cost.
Answer
Profit = 42.86%, and the selling price is above the 30% markup
The correct answer is Profit = 42.86%, and the selling price is above the 30% markup — Compare selling price (500) with cost + markup (455). Since 500 > 455, the price is above the 30% markup.
Step-by-step solution
- Find profit per saree: Selling price – Cost = 500 – 350 = Rs. 150.
- Calculate profit percentage: (Profit / Cost) × 100 = (150/350)×100 = 42.857% ≈ 42.86%.
- Compute 30% markup on cost: 30% of 350 = 0.30 × 350 = Rs. 105.
- Add markup to cost: 350 + 105 = Rs. 455.
- Compare selling price (500) with cost + markup (455). Since 500 > 455, the price is above the 30% markup.
Common mistake: Using selling price instead of cost to calculate markup; forgetting to convert percentage to decimal.
Concept tested: Markup pricing and profit percentage
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