A trader buys 40 kg of rice at KSh 120 per kg and 60 kg at KSh 140 per kg and mixes them. At what price per kg should the mixture be sold to make a profit of 20 percent?
Answer and explanation
Correct answer: D. KSh 158.40
- Step 1: Total cost = 40 x 120 + 60 x 140 = 4,800 + 8,400 = 13,200. Step 2. Cost per kg = 13,200 / 100 = 132. Step 3. Selling price = 132 x 1.2 = KSh 158.40. Answer: KSh 158.40. Why not the others: KSh 132: That is the mean cost, without the profit. KSh 130: That averages the two prices simply. KSh 168: That adds 20 shillings to the dearer rice.
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