The budget of a factory is distributed among raw materials, wages, and maintenance in the ratio 4:3:3. During a year, the cost of raw materials rises by 12%, wages by 8%, and maintenance falls by 10%. What is the overall percentage change in the total budget?
Correct Answer :
4.2% increase
Solution :
The correct option is 4.2% increase.
Step 1: Understand the initial ratio and assign values to the components of the budget.
The total budget of the factory is distributed among three components:
- Raw materials
- Wages
- Maintenance
The initial ratio of allocation is given as .
To simplify calculations, let the initial costs be proportional to these ratio values by multiplying them by 100:
Step 2: Calculate the total initial budget.
Step 3: Calculate the change in cost for each component.
1. Raw materials rise by 12%:
2. Wages rise by 8%:
3. Maintenance falls by 10%:
Step 4: Determine the net change in the total budget.
Since the net result is positive (+42), it represents an overall increase in the budget.
Step 5: Calculate the percentage change in the total budget.
Therefore, the overall percentage change in the total budget is a 4.2% increase.
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