Question

A Company wishes to earn a $20\%$ profit margin on selling price. Which of the following is the profit mark up on cost, which will achieve the required profit margin?

• A. $33\%$
• B. $25\%$
• C. $20\%$
• D. None of these

Answer 1

The correct option is B $25\%$

This can be explained as below:

Let us assume the Selling Price of a Unit - Rs.100

Profit on Selling Price is 20% i.e. Rs.20

Therefore cost per unit will be :

Selling Price -Profit= Cost

Rs.100-Rs.20=Rs.80

Hence cost per Unit is Rs.80

Profit Per Unit is Rs.20

Therefore Profit Per unit on Cost will be =20/80*100

=25% on Cost