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A company buys raw materials for Rs. 10,000 and manufactures a product that costs an additional Rs.5,000 in labour and overhead. The product is sold t
Question

A company buys raw materials for Rs. 10,000 and manufactures a product that costs an additional Rs.5,000 in labour and overhead. The product is sold to a distributor for Rs.25,000, who marks it up by 20% and sells it to a retailer. The retailer then marks it up by another 25% and sells it to the end customer. What is the overall percentage profit made by the company, distributor, and retailer combined?

A.

100%

B.

150%

C.

125%

D.

135%

Correct option is B

Total Production Cost = 10000+ 5000 = 15000
Product is sold to a distributor for Rs.25,000
Now, it marks up 20% and sold to the retailer at this price = 25000+ 20% of 25000 = Rs. 30000
Again retailer marks up 25% and sold it to the customer at this price = 30000+ 25% of 30000 = 37500

Overall Profit = 37500-15000= 22500

Profit % = 2250015000×100=150%\frac{22500}{15000}\times 100 = 150\%​​

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