XAT 2017 Question 68
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XAT
Profit = selling price - raw materials cost - selling cost - labor cost
Hence, raw materials cost = selling price - profit - selling cost - labor cost
Raw materials cost per Kurta
for factory 2, 5300-800-45-400*2 ....(1)
After technology is introduced, a worker takes 1.5 hour to produce a kurta.
Labor cost per Kurta = 1.5 * (Labor cost/ hour)
New Profit = selling price - raw materials cost - selling cost - new labor cost
Profit per kurta
for factory 2 = 5300-(5300-800-45-400*2)-45-400*1.5 = 800 + 400*0.5 = Original Profit per kurta + 0.5*Labour cost per hour
= 1000
Similarly,
for factory 3, 900+550*0.5 = 1175
for factory 4, 800+450*0.5 = 1025
for factory 5, 600+600*0.5 = 900
for factory 6, 875+400*0.5 = 1075
Factory 3 will yield highest profit.