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In a certain store, the profit is 320% of the cost. If the cost increases by 25% but the selling price remains constant, approximately what percentage of the selling price is the profit?

Correct answer: B. 70%

  • A. 30%
  • B. 70%
  • C. 100%
  • D. 250%

Explanation

Let the cost price be Rs. 100. A profit of 320% is Rs. 320, so the selling price is Rs. 420; after a 25% cost increase, the new cost is Rs. 125 and profit is Rs. 295. Profit as a percentage of selling price is (Rs. 295/Rs. 420) x 100 = 70.24%, approximately 70%. The likely mistake is 100%, which treats the profit as a percentage of cost rather than of selling price.

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About Profit and Loss

Profit and loss compare the cost price and selling price of an item, using profit or loss percentages based on the cost price unless stated otherwise. Questions include marked price, discount, successive discounts, commission, and finding an unknown price, with care needed to distinguish discount from loss.

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