Question

A manufacturer sells his product to a wholeseller at 20% return on cost. The wholeseller in turn makes a profit of 20% on his cost while selling it to a retailer. The retailer prices the product so that he gets a 28% margin on retail selling prices. Calculate the percentage increase in value from the manufacturer to the consumer.

Answer 1

Let cost price of the product for the manufacturer be Rs. x.

Since, the manufacturer sells his product to the wholeseller at 20% return on cost.

But, this is the cost price for the wholeseller.

\(\therefore\) cost price for the wholeseller \(= Rs.\, \frac{6x}{5}\)

Now, wholeseller makes 20% profit on his cost price.

But, this is the cost price for the retailer.

\(\therefore\) cost price for the retailer \(=Rs.\,\frac{36x}{25}\)

Given retailer makes 28% margin on retail selling prices.

\(\therefore\) The percentage increase in the value of the product from the manufacturer to the consumer is 84.32%.