A television manufacturer earns 20% profit by selling each T.V. set for Rs. 14400. If the production cost is increased by 15%, wh…

Question

A television manufacturer earns 20% profit by selling each T.V. set for Rs. 14400. If the production cost is increased by 15%, what should be the new selling price of a set so as to gain 15%?

1. A. Rs. 15870 (Correct answer)
2. B. Rs. 15000
3. C. Rs. 16500
4. D. Rs. 16350

Correct Answer

Option A — Rs. 15870

Detailed Solution & Explanation

The correct answer is Rs. 15870.

Key Points

• Selling at Rs. 14400 with 20% profit means cost price = 14400 ÷ 1.20 = Rs. 12000.
• A 15% rise in production cost gives a new cost of 12000 × 1.15 = Rs. 13800.
• To gain 15% on that, selling price = 13800 × 1.15 = Rs. 15870.

Additional Information

• Unless a question states otherwise, profit and loss percentages are always reckoned on the cost price, not the selling price — a convention that decides the whole calculation.
• The core relations are:
  • SP = CP × (1 + profit%)
  • CP = SP ÷ (1 + profit%)
• The order of operations matters here: the cost must be recovered from the original selling price before the 15% increase is applied, since the new cost is a rise on the old cost, not on the selling price.