The accountants of a company show sales of Rs. 12,600. The primary cost is 35% of sales and trading cost accounts for 25% of the gross profit. Gross profit is arrived at by excluding the primary cost plus the cost of advertising expenses of Rs. 1400, director's salary of Rs. 650 per annum plus 2% annual sales as miscellaneous costs. Find the percentage profit (approx) on a capital investment of Rs. 14,000?

A. 35%

B. 31%

C. 28%

D. 26%

E. Cannot be determined

Answer: Option B

Solution(By Examveda Team)

Primary Cost:
35% of 12600 = 4410
Miscellaneous costs:
2% of 12600 = 252
Gross Profit = 12600 - 4410 - 1400 - 650 - 252 = 5888
Trading Cost = 0.25 × 5888 = 1472
Hence, Net Profit = 4416
% Profit =$$\frac{{4416}}{{14000}} \times100$$
               = 31.54%
               ≈ 31%