Question

The cost of an article including sales tax is 616 rupees. The rate of sales tax is 10%. If the shopkeeper has made a profit of 12%, then the cost price of the article is?
A.350 rupees
B.400 rupees
C.500 rupees
D.800 rupees

Answer 1

Hint: The sales tax will be calculated on the selling price of the final commodity and not the cost at which it was bought by the shopkeeper.

Complete step-by-step answer:
 For the first step of the problem we assume the cost price of the shopkeeper to be x
 Let C.P. be Rs x
Therefore,
 The selling price will be x plus 12% of x which is the profit
 x+12% of x
 $\Rightarrow \dfrac{28x}{25}$
 The sales tax is taxed on the selling price i.e. the cost price and the profit,
After adding the two we can equate it with the price including sales tax given in the sum
The total of all the tax, profit, and cost price is the selling price.
Therefore,
$\dfrac{28x}{25}+10% of \dfrac{28x}{25}=616$
Now we take the percentages and add bring the denominator to a common value and add
After calculation,
X is found out to be 500 rupees i.e. option (c) is correct.

Note: Students often make mistakes by calculating sales tax on the cost price and not the selling price. Thus they get a lower answer which is wrong. They also forget to add both the profit and the sales tax.