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 answer is Rs.4000.

Step 1: Define the variable for Production Cost
Let the original production cost of the computer be C.

Step 2: Calculate the Listed Price
The retailer sets the listed price 80% higher than the production cost.
Listed Price=C+0.80C=1.80C

Step 3: Calculate the Distributor's Buying Price
The distributor buys the computer at a 50% discount (markdown) on the listed price.
Distributor Cost=1.80C×(1-0.50)
Distributor Cost=1.80C×0.50=0.90C

Step 4: Calculate the Retail Customer's Buying Price
The distributor resells the computer to a retail customer at a 25% margin over their purchase cost.
Customer Price=Distributor Cost×(1+0.25)
Customer Price=0.90C×1.25=1.125C

Step 5: Solve for the Production Cost (C)
We are given that the customer bought the computer for Rs. 4500.
1.125C=4500
C=45001.125
C=4000

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

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