Rahat bought a fridge for Rs. 12500 after a 20% discount on its marked price, paying Rs. 125 for transport and Rs. 250 for setup. At what price should it be retailed to yield a 10% profit with no discount?
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Answer: D. Rs. 17600
Explanation
Adding the initial purchase price of twelve thousand five hundred to transport and setup gives total cost. Calculating a ten percent profit margin on this comprehensive cost base determines the target return. Requiring no discount means the retail price must equal the cost plus profit, yielding seventeen thousand six hundred. Total acquisition cost includes purchase price plus all associated shipping, handling, and installation fees. Profit markups are calculated directly from the total capital invested in acquiring and preparing goods. Marked retail prices must absorb all overhead expenses before delivering the intended percentage profit.
Appliance retailers factor delivery and installation expenses into their pricing models to protect profit margins. Business accounting requires tracking all incidental setup costs when determining inventory asset values. Pricing strategy dictates that selling prices must cover operational overhead alongside desired profit margins. Option A underestimates the required retail price by omitting specific incidental setup expenses. Option B results from calculating profit on the discounted price rather than the total cost base. Option C fails to match the exact mathematical calculation derived from the comprehensive cost total.
- Subject
- Mathematics
- Category
- Mathematics
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- —
- Difficulty
- medium
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