Question

Bhajan Singh purchased 120 reams of paper at Rs 80 per ream. He spent Rs 280 on transportation, paid octroi at the rate of 40 paise per ream and paid Rs 72 to the coolie. If he wants to have gain of 8 percent what must be the selling price per ream?
$\begin{align}
  & \text{a) Rs 86} \\
 & \text{b) Rs 87}\text{.48} \\
 & \text{c) Rs 89} \\
 & \text{d) Rs 90} \\
\end{align}$

Answer 1

Hint: Now to solve this question we will first need to find the total investment. The total investment is the total cost which includes the cost price + transportation charges + octroi charges + charges of coolie. Now once we have total investment we can easily find the profit as we know that profit percentage is 8 percent. Now once we have profit we can find selling price by formula selling price = total cost price + profit. Now this is the total selling price by 120 reams. Hence we will find the selling price of 1 ream.

Complete step by step answer:
Now first we will calculate the total investment of Bhajan Singh.
The total investment is basically total cost.
Now here total investment consists of cost price + transportation cost + cost of octroi + cost of coolie.
Now Bhajan Singh purchased 120 reams of paper at Rs 80 per ream.
Hence total cost price is $120\times 80=9600$
Hence the total cost price is 9600.
Now per ream he pays 40 paise octroi
Now we know that 100 paise is 1 Rs, Hence 1 paise is $\dfrac{1}{100}Rs$
Hence we have 40 paise = $\dfrac{40}{100}Rs$
Now since he buys 120 reams total cost he pays for octroi is
$\dfrac{40}{100}\times 120=48$
Now we know that the cost of coolie and the cost of transportation is 72 and 280 respectively.
Hence we get,
Total investment = cost price + transportation cost + cost of octroi + cost of coolie.
= 9600 + 280 + 48 + 72 = 10000Rs.
Now the total Investment is 10000Rs.
Now we want to make a profit of 8 percent
Hence profit = $\dfrac{8}{100}\times 10000=800$
Now we know that selling price = Total cost price (In this case investment) + profit.
Hence we get Selling price = 10000 + 800 = 10800.
Now this is the selling price of 120 reams.
Hence selling price of 1 ream will be $\dfrac{10800}{120}=90$
Hence the selling price of 1 ream is 90 Rs.

So, the correct answer is “Option D”.

Note: Now we know the general formula of selling price = cost price + profit. But now we have that the cost price is not the only price since there are transportation charges, octroi charges and coolie charges as well. Hence we consider total investment instead of just the cost price. Also note that when we get the final selling price this is for 120 reams and not 1 ream and hence we need to find the price of 1 ream by dividing by 120.