An Indian company, having its registered office at Gurugram, is engaged in manufacturing of consumer goods at Noida. The goods manufactured by the company are sold in Indian market and exported to Europe. Company produces five products namely ‘P’, ‘Q’, ‘R’, ‘S’ and ‘T’. Total production of the company for the financial year 2021-22 is 3,000 tonnes and the turnover of the company is ₹ 50 million. Analysis of the production and net revenue generation shows that production of product ‘P’ is 21% of the total production and 18% of the turnover is attributable to product ‘P’; production of ‘Q’ is 16% of the total production and 17% of the turnover is attributable to ‘Q’; ‘R’ accounts for 18% of the total production and 20% of the turnover; ‘S’ accounts for 20% of the total production and 25% of the turnover, and; ‘T’ accounts for 25% of total production and 20% of turnover.

What is the percentage of profit earned from sale of ‘R’, if the expenditure incurred on production of ‘r’ is Rs. 15,000/- per tonne?

The correct answer is 23.46%.

Step 1: Given Information & Data Extraction

From the problem statement, we have the following global details for the financial year 2021-22:

Total Production = 3,000 tonnes
Total Turnover (Net Revenue) = ₹ 50 million = ₹ 5,00,00,000 (since 1 million = 10,00,000)

For product ‘R’:

Production share of ‘R’ = 18% of total production
Turnover share of ‘R’ = 20% of total turnover
Cost of production per tonne of ‘R’ = Rs. 15,000

Step 2: Calculate the Total Production Quantity for Product ‘R’

Total production of ‘R’ is 18% of 3,000 tonnes:

$\text{Production of R}=3000\times \frac{18}{100}=540\text{ tonnes}$

Step 3: Calculate Total Cost (Expenditure) for Product ‘R’

The expenditure incurred on production of ‘R’ is Rs. 15,000 per tonne:

$\text{Total Cost for R}=540\times 15000=\text{Rs. }\mathrm{81,00,000}$

Step 4: Calculate Total Revenue (Turnover) from Product ‘R’

Product ‘R’ accounts for 20% of the total turnover of ₹ 5,00,00,000:

$\text{Total Revenue from R}=50000000\times \frac{20}{100}=\text{Rs. }\mathrm{1,00,00,000}$

Step 5: Calculate the Profit Earned from Product ‘R’

$\text{Profit}=\text{Total Revenue}-\text{Total Cost}$

$\text{Profit from R}=10000000-8100000=\text{Rs. }\mathrm{19,00,000}$

Step 6: Calculate Percentage of Profit

The percentage of profit earned from the sale of product ‘R’ is calculated relative to its total expenditure (cost price):

$\text{Profit Percentage}=\left(\frac{\text{Profit}}{\text{Total Cost}}\right)\times 100$

$\text{Profit Percentage}=\left(\frac{1900000}{8100000}\right)\times 100=\frac{19}{81}\times 100\approx 23.4567\%$

Rounding off to two decimal places gives 23.46%.