The following table shows the Income (in ₹ lakh) and percentage (%) profit of…
2023
The following table shows the Income (in ₹ lakh) and percentage (%) profit of a company over the six years from 2017 to 2022. Based on the data in the table:
Year-wise Income and Profit of a Company
Year | Income (in ₹ lakh) | Profit (%) |
|---|---|---|
2017 | 120 | 7.5 |
2018 | 160 | 15 |
2019 | 130 | 22.5 |
2020 | 170 | 17.5 |
2021 | 190 | 20 |
2022 | 150 | 27.5 |
Approximately what was the average expenditure during the year from 2017 to 2022?
Answer: B. ₹ 130 lakh — CONCEPTWhen profit percentage is calculated on expenditure, income equals expenditure multiplied by (1 + profit percentage/100). Therefore, expenditure equals…
- A.
₹ 110 lakh
- B.
₹ 130 lakh
- C.
₹ 120 lakh
- D.
₹ 140 lakh
Show answer & explanation
Correct answer: B
CONCEPT
When profit percentage is calculated on expenditure, income equals expenditure multiplied by (1 + profit percentage/100). Therefore, expenditure equals income divided by (1 + profit percentage/100).
For several years, calculate each year’s expenditure separately, add those expenditures, and divide the sum by the number of years to obtain the arithmetic mean.
APPLICATION
2017: Expenditure = 120/1.075 = ₹111.63 lakh (approximately).
2018: Expenditure = 160/1.15 = ₹139.13 lakh (approximately).
2019: Expenditure = 130/1.225 = ₹106.12 lakh (approximately).
2020: Expenditure = 170/1.175 = ₹144.68 lakh (approximately).
2021: Expenditure = 190/1.20 = ₹158.33 lakh (approximately).
2022: Expenditure = 150/1.275 = ₹117.65 lakh (approximately).
Total expenditure = 111.63 + 139.13 + 106.12 + 144.68 + 158.33 + 117.65 = ₹777.54 lakh.
Average expenditure = 777.54/6 = ₹129.59 lakh, which is approximately ₹130 lakh.
CROSS-CHECK
Multiplying the unrounded average by 6 gives ₹777.54 lakh, the same as the sum of the six year-wise expenditures. Thus, the required approximate value is ₹130 lakh.