Question

At a production level of 500 TVs, the selling price per unit is such that there is a net profit of 20%. What will be the impact on the net profit if the selling price per unit is reduced by 16.66% and the total number of units produced is increased by 40%?

• A. it will increase by less than 20% but more than 10%
• B. it will increase by less than 30% but more than 20%
• C. it will decrease by less than 15% but more than 5%
• D. None of these

Answer 1

The correct option is D None of these

For n = 500, CP/unit = Rs 20,000
SP/unit = Rs 24,000
Profit/unit = Rs 4000
Hence total profit = Rs 20 lacs
Now, if the production is increased by 40%, then the total number of units produced = 7000 units.
CP/unit = Rs 24000
Total profit = Rs 20 lacs
So, the net profit will be the same.
Therefore, the correct answer is option (d)