Question

A company produces 5 products: P, Q, R, S, and T. The profit margins (in %) are: P-10%, Q-15%, R-20%, S-5%, T-25%. If the company earns a total profit of ₹21,20,000 from equal sales (₹21,00,000) of each product, what is the average profit percentage across all products?

• A. 15%
• B. 12%
• C. 14%
• D. 13%

Hint:

When sales are equal, average profit margin = average of individual profit percentages.

Answer 1

The Correct Option is A

To find the average profit percentage across all products, we need to first determine the profit for each product based on their profit margins and sales, then find the total profit percentage. The company earns a total profit of ₹21,20,000 from equal sales (₹21,00,000) of each product. There are 5 products, so the sales for each product is ₹21,00,000.

The steps are as follows:

1. Calculate the profit for each product using the formula: Profit = (Profit Margin / 100) × Sales.
2. Sum up the profits for all products to find the total profit.
3. Calculate the total sales of all products and then compute the average profit percentage using the formula: Average Profit Percentage = (Total Profit / Total Sales) × 100.

Product	Profit Margin (%)	Sales (₹)	Profit (₹)
P	10	21,00,000	(10/100)×21,00,000 = 2,10,000
Q	15	21,00,000	(15/100)×21,00,000 = 3,15,000
R	20	21,00,000	(20/100)×21,00,000 = 4,20,000
S	5	21,00,000	(5/100)×21,00,000 = 1,05,000
T	25	21,00,000	(25/100)×21,00,000 = 5,25,000

Total Profit = 2,10,000 + 3,15,000 + 4,20,000 + 1,05,000 + 5,25,000 = 15,75,000

Total Sales = 21,00,000 × 5 = 1,05,00,000

Average Profit Percentage = (15,75,000 / 1,05,00,000) × 100 = 15%

Therefore, the average profit percentage across all products is 15%.