Question 3
-
Tion Ltd is a distributor of animal feeds. The company spent N 600,000 to purchase 200 bags of the product and two percent of the cost as delivery charges. After sales, the company made twenty percent profit from the transaction.
(a) Amount paid as delivery charge per bag;
Calculate: - Cost price per bag of the product;
- Selling price per bag of the product;
- Profit made from the transaction by the company.
Profit made from the transaction.
Observation
(a) Quantity of animal feeds purchased = 200 bags
Amount spent – N 600,000
Delivery charges (2% of N 600,000)
= 2/100 x 600,000 = 12,000
Amount paid as delivery charges per bag of feed =12,000 /200
= N 60
(b) Cost price per bag of the product = cost of the product plus delivery charge 1 mark
= N 600,000/200 + N 60
= N 3,000 + N60 = N3, 060
(c) Selling price per bag of the product;
Selling price per bag = cost price + profit
Profit = 20% of cost price
20/100 X 3,060 = N 612
Selling price per bag of the product = N 3,060 + N 612
= N 3,672
(d) Profit = Selling price (SP) – Cost price (CP)
SP = N 3,672 X 200 = N 734,400
CP = N 3,060 X 200 = N 612,000
Profits from the entire transaction = N 734,400 – N 612,000 = N 122,400