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CAT 2003 Slot 2 — DILR Question 41

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Passage / Data

Answer the following question based on the information given below.

The following is the Wholesale Price Index (WPI) of a select list of items with the base year of 1993-94. In other words, all the item prices are made 100 in that year (1993-94). Price in all other years for an item are measured with respect to its price in the base year. For instance, the price of cement went up by 1% in 1994-95 as compared to 1993-94. Similarly, the price of power went up by 3% in 1996–97 as compared to 1993-94.

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Let us suppose that one bag of cement (50 kgs) consumes 100 kgs of limestones and 10 units of power. The only other cost item in producing cement is in the form of wages. During 1993-94, limestone, power and wages contribute, respectively, 20%, 25%, and 15% to the cement price per bag. The average operating profit (% of price per cement bag) earned by a cement manufacturer during 2002-03 is closest to

Answer & solution

Correct answer: 38.5%

  • A

    40%

  • B

    39.5%

  • 38.5%

  • D

    37.5%

Solution

WPI of cement in 2002-03 = 104

Operating cost of cement can be calculated as below:

​​​​​​​

∴ Operating Profit per bag of cement

=104-63.795104× 100 = 38.7%

Hence, option (c).

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CAT 2003 Slot 2 DILR Q41: Let us suppose that one bag of cement (50 kgs) consumes 100 kgs of limestones and 10 units of power. The only — Solution | TheCATExam