Q.A manufacturer's cost of producing one unit of a product is ₹80. The firm follows a cost-plus pricing policy with a mark-up of 25% on cost. Determine the selling price. What would the price be if the mark-up were raised to 40%?

Cost-plus pricing adds a fixed percentage margin to the unit cost, so the selling price is the cost multiplied by one plus the mark-up rate. …

Step 1 — Cost-plus formula.

Step 2 — At a 25% mark-up. Mark-up amount $= 80 \times 0.25 = ₹20$.

Step 3 — At a 40% mark-up. Mark-up amount $= 80 \times 0.40 = ₹32$.

$\text{Price} = 80 + 32 = 80 \times 1.40 = ₹112$ …

Dual-check by separating cost and profit. At 25%: profit per unit $= ₹20$, so price $= 80 + 20 = ₹100$. At 40%: profit per unit $= ₹32$, so price $= 80 + 32 = ₹112$. Adding the mark- …

Taking the mark-up on the selling price instead of on cost (that is margin, a different base). Multiplying cost by the mark-up rate alone (0.25) and reporting ₹20 as the p …