The cost of making a ceiling fan is made up of materials 40%, labour 35% and overheads 25%. Materials become 20% dearer and labour 8% dearer, while overheads are unchanged. To keep his profit margin exactly what it was, the manufacturer must raise the fan's price by what percent?

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Accepted Answer

10.8. Take the old cost as ₹100. It becomes 40 × 1.20 + 35 × 1.08 + 25 = 48 + 37.8 + 25 = ₹110.80, a rise of 10.8%. Since the margin is a fixed percent of cost, the price must rise by the same 10.8%. (Adding the two rate rises to 28% ignores that they act on only part of the cost, and averaging them to 14% ignores the quarter of the cost that did not move at all.)

The cost of making a ceiling fan is made up of materials 40%, labour 35% and overheads 25%. Materials become 20% dearer and labour 8% dearer, while overheads are unchanged. To keep his profit margin exactly what it was, the manufacturer must raise the fan's price by what percent?

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