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 expenditure in 2018?
Answer: C. ₹ 140 lakh — ConceptWhen profit percentage is measured on expenditure (cost), income equals expenditure plus profit. Therefore, if income is I and the profit rate is r%,…
- A.
₹ 120 lakh
- B.
₹ 160 lakh
- C.
₹ 140 lakh
- D.
₹ 180 lakh
Show answer & explanation
Correct answer: C
Concept
When profit percentage is measured on expenditure (cost), income equals expenditure plus profit.
Therefore, if income is I and the profit rate is r%, then expenditure E satisfies I = E(1 + r/100), so E = I/(1 + r/100).
Application
For 2018, take income I = ₹160 lakh and profit rate r = 15%.
Substitute in the formula: E = 160/(1 + 15/100) = 160/1.15.
Thus E = 139.13 lakh, which is approximately ₹140 lakh.
Cross-check
Profit on an expenditure of ₹140 lakh is ₹20 lakh, and (20/140) × 100 ≈ 14.29%, close to the tabulated 15% because the answer is approximate.
Therefore, the approximate expenditure in 2018 was ₹140 lakh.