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<p>XYZ a manufacturer produces a product A which costs to him100 and wanted to earn16 as net profit and also wanted to give16% as cash discount what would be the selling price?</p>
Habibi ... The cost of the product in business terms is only a component of the cost. There are others such as:-
Distribution Cost, Overhead Cost, Warehouse, logistics & Re-supply cost, Retailing cost (Retailer Margin/Rebates), Depreciation & many more.
As i believe the Manufacturing cost you have included in it (Though it is wrong As Distribution cost/Retailer Cost & Logistics & resupply is calculated by Selling price & not on cost price :-) )
Moving ahead with the said question:-
Cost =100
Selling Price Should be =141 (Discount is not given at the company's cost but consumer price or SP)
Thus, SP (Selling Price)=141 -16% Discount (*141=22.56) Thus after discount it is118.44
And Company Margin is (118.44-100)/118.44 =16% (Margin Formula is SP-Cost/SP) after discount.
Thus, in Order to have16% GP & to give discount of16% the company's BP (Or Selling Price) should be141.00 -)
(I am really shocked why most people has taken138.10 , what is the logic behind this)
The net selling price after the discount would be 116. Which is 84% of the gross selling price. The gross selling price is therefore 116/84*100 = 138.10
Selling price =138.10
The Selling Price would be calculated as follows:
(100+16) /0.84 =138.10
Selling price (100+16)/(1-0.16)=138.10
138.10 if there are no overheads
The Sales Price should be138/-
Sales Price Rs138/- Less16% Discount will be Rs22/- and therefore net sale price will be Rs116/-
Less Cost of Rs100/- shall yield a profit of Rs16/-
Agree with All Answer
Selling price of the product A before discount is =
.4
Well done Aeisha..! You precisely presented a neat and clean answer.
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