Percentages: Question 7 - distribution chain and calculation of final profit


In the distribution of product X, Ann sold to Kris at a profit of 20%. Kris at a profit of 10% and Stone sold to Ivy at a profit of 25%. If product X had cost Ann a sum of $15, calculate
a)  The find selling price
b)  The cumulative profit percentage.
Solution
Arrange the chain of distribution as follows as per cost and profits.
Ann – Kris – Stone – Ivy = $15 - $20% - 10% - 25%
Cost of X to Ann = $15.00
   Add: Profit to Ann (20% x $15)        3.00
Cost of X to Kris         18.00
   Add: Profit to Kris (10% x $18)    1.80
Cost of X to Stone    19.80
   Add: Profit to Stone (25% x $19.8)    4.95
Cost of X to Ivy          24.75
Thus, final selling price is $24.75
Final profit percentage is computed thus.
(final sales price – initial cost*100%)/Initial Cost                                           
= (24.75 – 15) * 100% / 15                          =  9.75 * 100% /15
  =  975 ÷ 15
  = 65%
Thus, cumulative profit percentage is 65%
Method 2
Final percentage profit is gotten by multiplying all the series of sales prices as follows:
1.20 * 1.10 * 1.25 = 1.65
So profit = 1.65 – 1 = 0.65
                = 65%

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