A company instead of raising the mark-up by 20% discounted the cost price by 20%

Ques - A company instead of raising the mark-up by 20% discounted the cost price by 20% while stiching the price tag on its product. Further the company offers a discount of 6.25% to its customer. In this process company incurs a loss of Rs. 37.5 on a single article. What is the selling price of that article?

(a) 417.5

(b) 112.5

(c) 365.5

(d) None of these

Solution - 

Let,

The CP of product = 100x

Discounted the cost price by 20% while stiching the price tag on its product.

Tag price = 100x (80/100)

Tag price = 80x

Further the company offers a discount of 6.25% to its customer.

SP, after discount = 80x - 80x(1/16)

SP, after discount = 80x - 5x

SP = 75x

Here,

Total Loss = CP - SP

= 100x - 75x

= 25x

But,

Company incurs a loss of Rs. 37.5 on a single article.

So,

25x = 37.5

x = 37.5 / 25

x = 1.5

SP = 75 × 1.5

SP = 112.5

Therefore,

The Selling price of that article is 112.5.

Hence,

The correct answer is option (b) 112.5.

Thank You