Question

Answer the following questions on the basis of the data given below.

Jamshedpur Electronics sells Television sets and IPods through three retail outlets located in Bistupur, Sakchi and Kadma. The table below gives the sales figures (in Rupees thousand) of these two products for the months of January, February and March.

Note: Units ordered = Units sold + Ending inventory - Beginning inventory. All other things remain constant, and all Rupee figures are in thousands.

In the period from January to March, Jamshedpur Electronics sold 3150 units of Television, starting with a beginning inventory of 2520 units and ending with an inventory of 2880 units. Profits are 25% of the cost price, uniformly. What was the value of the order placed (in Rupees thousand) by Jamshedpur Electronics during this three month period?

• A. 2808
• B. 26325
• C. 22320
• D. 28080

Hint:

First find the total units ordered using the inventory formula, then convert the selling price per unit into a cost price per unit before valuing the order.

Answer 1

The Correct Option is D

This question links two ideas: an inventory rule that tells us how many units were ordered, and a profit rule that links selling price to cost price. Let's handle these as two short calculations and then combine them.

1. Units ordered: whatever units are missing from the shelf (either sold or still sitting in the ending stock), minus what was already there at the start, must have arrived through fresh orders. So units ordered = 3150 (sold) + 2880 (ending) - 2520 (beginning) = 3510 units.
2. Selling price per unit: reading the table, total Television revenue from January to March, adding every area's three monthly figures, comes to 31500 (Rupees thousand). Dividing by the given 3150 units sold gives a selling price of $31500/3150 = 10$ per unit.
3. Cost price per unit, using a fraction instead of a decimal: if profit is 25% of cost, selling price is $\frac{5}{4}$ of cost price, since $1 + \frac{1}{4} = \frac{5}{4}$. So cost price = selling price times $\frac{4}{5}$, which is $10 \times \frac{4}{5} = 8$.
4. Order value: the order is placed and paid for at cost price, so order value = $3510 \times 8$. Splitting this multiplication up: $3510 \times 8 = 3500 \times 8 + 10 \times 8 = 28000 + 80 = 28080$.

Every other option either mixes up selling price with cost price, or drops a term from the units-ordered formula, both common slips in this kind of inventory question.

Let's summarize:

• Units ordered = units sold + ending inventory - beginning inventory = 3510.
• Cost price is $\frac{4}{5}$ of selling price when profit is 25% of cost, giving 8 per unit.
• Order value = units ordered x cost price = 3510 x 8 = 28080.

So the value of the order placed is Rupees 28080 thousand.