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CAT 1998 — QA Question 27

Profit & LossEasy
Passage / Data

Answer the next 2 questions based on the following information.

A company purchases components A and B from Germany and USA respectively. A and B form 30% and 50% of the total production cost. Current gain is 20%. Due to change in the international scenario, cost of the German mark increased by 30% and that of USA dollar increased by 22%. Due to market conditions, the selling price cannot be increased beyond 10%.

If the USA dollar becomes cheap by 12% over its original cost and the cost of German mark increased by 20%, what will be the gain? (The selling price is not altered.)

Answer & solution

  • A

    10%

  • 20%

  • C

    15%

  • D

    7.5%

Solution

Let CP = 100
Current gain = 20
⇒ SP = 120
CP = Cost of A + Cost of B + other
      =      30%    +    50%     +   20%

New cost of A = 30 + 20% of 30 = 36
New cost of B = 50 – 12% of 50 = 44
New CP = 36 = 44 + 20 = 100
Gain = 20%

CAT 1998 QA Q27: If the USA dollar becomes cheap by 12% over its original cost and the cost of German mark increased by 20%, wh — Solution | TheCATExam