The Maximum Retail Price (MRP) of a product is 55% above its manufacturing cost

The Maximum Retail Price (MRP) of a product is 55% above its manufacturing cost. The product is sold through a retailer, who earns 23% profit on his purchase price. What is the profit percentage (expressed in nearest integer) for the manufacturer who sells his product to the retailer? The retailer gives 10% discount on MRP.

  1. 31%
  2. 22%
  3. 15%
  4. 13%
  5. 11%

Solution

The manufacturer sells the product to retailer, and then retailer sells to the buyer.

Assume manufacturing cost = 100 and manufacturer profit = x%

As Maximum Retail Price (MRP) of a product is 55% above its manufacturing cost,

MRP = 100(1 + 0.55) = 155

The retailer gives 10% discount on MRP. So, buyer price is 90% of MRP.

Buyer Price = 155×0.9

Manufacturer makes x% profit, and then retailer makes 23% profit.

So, 100(1 + x)×(1 + 0.23) = 155×0.9

x = 0.134

Hence, Manufacturer profit = 13% (nearest integer)

The correct option is D.