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CAT 1996 — QA Question 12

Profit & LossEasy
Passage / Data

Direction: Answer the questions based on the following information.

A watch dealer incurs an expense of Rs. 150 for producing every watch. He also incurs an additional expenditure of Rs. 30,000, which is independent of the number of watches produced. If he is able to sell a watch during the season, he sells it for Rs. 250. If he fails to do so, he has to sell each watch for Rs. 100.

If he is able to sell only 1,200 out of 1,500 watches he has made in the season, then he has made a profit of

Answer & solution

Correct answer: Rs. 75,000

  • A

    Rs. 90,000

  • Rs. 75,000

  • C

    Rs. 45,000

  • D

    Rs. 60,000

Solution

Total expense incurred in making 1,500 watches = (1500 x 150) + 30000 = Rs. 2,55,000.

Total revenue obtained by selling 1,200 of them during the season = (1200 × 250) = Rs. 3,00,000. 

The remaining 300 of them has to be sold by him during off season.
The total revenue obtained by doing that = (300 × 100) = Rs. 30,000. 

Hence, total revenue obtained = (300000 + 30000) = Rs. 3,30,000. 

Hence, total profit = (330000 – 255000) = Rs. 75,000.

Hence, option (b).

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CAT 1996 QA Q12: If he is able to sell only 1,200 out of 1,500 watches he has made in the season, then he has made a profit of — Solution | TheCATExam