A manufacturer sells a product to a wholesaler at a profit of 40%. The wholesaler, in turn, sells it to a retailer at a profit of 40%, and the retailer sells it to a customer at a profit of 25%. If the customer pays ₹490, find the cost price (in ₹) for the manufacturer.
- AOption (a)
₹197
- BOption (b)
₹201
- COption (c)
₹200
- DOption (d)
₹203
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Correct answer
₹200
Why this answer is correct
Shortcut Trick
Convert profit percentages to fractions: 40% = 2/5 (multiplier 7/5) and 25% = 1/4 (multiplier 5/4).
Apply successive multipliers: Total Multiplier = 7/5 × 7/5 × 5/4 = 49/20.
Ratio of Initial CP to Final SP = 20 : 49.
Given Final SP = ₹490 ⇒ 49 units = 490 ⇒ 1 unit = ₹10.
Initial CP (Manufacturer) = 20 units = 20 × 10 = ₹200.
∴ The correct answer is ₹200.
Alternate Method
Given:
Profit of Manufacturer to Wholesaler (P1) = 40%
Profit of Wholesaler to Retailer (P2) = 40%
Profit of Retailer to Customer (P3) = 25%
Price paid by Customer = ₹490
Formula Used:
Final Price = CP × (1 + P1/100) × (1 + P2/100) × (1 + P3/100)
Calculations:
Let the cost price for the manufacturer be ₹x.
⇒ x × (140/100) × (140/100) × (125/100) = 490
⇒ x × (7/5) × (7/5) × (5/4) = 490
⇒ x × (49/20) = 490
⇒ x = (490 × 20) ÷ 49
⇒ x = 10 × 20 = 200
∴ The correct answer is ₹200.
Additional Information
Successive Percentage Change
When a value changes by a% and then by b%, the effective change is (a + b + ab/100)%.
Effective Profit Margin
The total profit percentage in a chain is calculated by multiplying the profit factors: (1 + P1) × (1 + P2) × ... × (1 + Pn).
Profit and Cost Price Relation
Selling Price (SP) = CP × (100 + Profit%)/100. Conversely, CP = SP × 100/(100 + Profit%).
