Indian Institute of Foreign Trade 2008 Solved Paper

Question : 84 of 150

Marks: +1, -0

If the price per unit decreases by 20% during 2000-2004 and cost per unit increases by 20% during 2005-2010, then during how many number of years there is loss?

3 years
4 years
4 years
7 years

Validate

Solution:

Let's calculate No of Units as Revenue / Unit price.
Per Unit cost as (Revenue - Profit ) / No of Units.
Costs Incurred = Revenue - Profit
If there is a percent 20 % increase in the cost price for year 2005-10 and the 20%decrease in price during 2000-2004.
In that way, we calculate the table as follows.

YEAR	UNIT PRICE	REVENUE	UNITS PURCHASED	PROFIT	COSTS INCURRED	COSTS PER UNITS	EFFECTIVE UNIT PRICE	EFFECTIVE COST PRICE	EFFECTIVE PROFIT
2000	10	700	70	0	700	10	8	10	-140
2001	14	1400	100	100	1300	13	12.2	13	-180
2002	12	1200	100	300	900	9	9.6	9	60
2003	12	900	75	150	750	10	9.6	10	-30
2004	11	1100	100	0	1100	11	8.8	11	-220
2005	8	400	50	150	250	5	8	6	100
2006	10	200	20	100	100	5	10	6	80
2007	14	700	50	200	500	10	14	12	100
2008	10	600	60	0	600	10	10	12	-120
2009	10	800	80	400	400	5	10	6	320
2010	15	900	60	300	600	10	15	12	180

The company will incur a loss if unit price is lesser than unit cost price.
Thus for 2000, 2001, 2003, 2004 and 2008 there will be net loss. For 5 years there was a loss.
Hence C is the correct answer.

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