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A trader prints price-tags after having decided to sell his product at 25% profit over the cost price that his supplier has just informed. He later realises that a 10% GST would also be payable on the product sourced from the supplier. What is his profit now, in percent?

Solution

✅ Correct Option: 1

Let the cost price informed by the supplier =100= 100

The trader prints price tags at 25% profit over this cost price.

Selling Price=100+25% of 100=125\text{Selling Price} = 100 + 25\% \text{ of } 100 = 125

Since the tags are already printed, the selling price is locked at 125.


A 10% GST is payable on the product sourced from the supplier, so the actual cost becomes:

Actual Cost=100+10% of 100=110\text{Actual Cost} = 100 + 10\% \text{ of } 100 = 110


Profit=Selling Price−Actual Cost\text{Profit} = \text{Selling Price} - \text{Actual Cost}

=125−110= 125 - 110

=15= 15


Profit % is calculated on the actual cost (total amount spent):

Profit %=15110×100\text{Profit \%} = \dfrac{15}{110} \times 100

=13.63%= 13.63\%

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