If the company maintains the same profit margin in the year 2015 as it had in 2013, what will be the selling price of the product in 2015?

Given data (in INR thousands):

| Year | Selling Price (SP) | Cost Price (CP) | Overhead Expenditure |
|-------|-------------------|----------------|---------------------|
| 2013 | 800 | 560 | 80 |
| 2015 | 680 | 480 | 200 |

Question

If the company maintains the same profit margin in the year 2015 as it had in 2013, what will be the selling price of the product in 2015?

Given data (in INR thousands):

| Year | Selling Price (SP) | Cost Price (CP) | Overhead Expenditure |
|-------|-------------------|----------------|---------------------|
| 2013  | 800               | 560            | 80                  |
| 2015  | 680               | 480            | 200                 |

Accepted Answer

**Solution:**

1. Calculate the total cost for the year 2013:
   - Cost Price (CP) = INR 560,000
   - Overhead Expenditure = INR 80,000
   - Total Cost = CP + Overhead = 560,000 + 80,000 = INR 640,000

2. Calculate the profit in 2013:
   - Selling Price (SP) = INR 800,000
   - Profit = SP - Total Cost = 800,000 - 640,000 = INR 160,000

3. Calculate the profit percentage for 2013:
   $$	ext{Profit \%} = \frac{160,000}{640,000} 	imes 100 = 25\%$$

4. Calculate the total cost for the year 2015:
   - CP = INR 480,000
   - Overhead Expenditure = INR 200,000
   - Total Cost = 480,000 + 200,000 = INR 680,000

5. Since the profit margin remains the same (25%), calculate the new selling price for 2015:
   $$	ext{New SP} = 	ext{Total Cost} 	imes (1 + \frac{25}{100}) = 680,000 	imes 1.25 = INR 850,000$$

**Answer:** INR 850,000

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