Question Details

A retailer sets the listed price of a computer 80% higher than its production cost. A distributor buys the computer at a 50% markdown on the listed price and subsequently resells it to a retail customer at a 25% margin. If the customer bought the computer for Rs. 4500, calculate the original production cost of the computer.

Options

A

Rs.3600

B

Rs.4200

C

Rs.4800

D

Rs.4000

E

Rs.3900

Show Answer

Correct Answer :

Option D

Rs.4000

Solution :

The correct option is Rs.4000.

Step 1: Express the listed price in terms of the production cost.

Let the original production cost of the computer be C.

The retailer sets the listed price 80% higher than the production cost:

Listed Price=C+0.80C=1.80C

Step 2: Calculate the price paid by the distributor.

The distributor buys the computer at a 50% markdown on the listed price:

Distributor's Cost=1.80C×(1-0.50)=1.80C×0.50=0.90C

Step 3: Calculate the selling price to the customer.

The distributor resells the computer to a retail customer at a 25% margin (markup on cost):

Selling Price=0.90C×(1+0.25)=0.90C×1.25=1.125C

Step 4: Solve for the production cost.

Given that the customer bought the computer for Rs. 4500:

1.125C=4500

C=45001.125=4000

Therefore, the original production cost of the computer is Rs. 4000.

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