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A receives a salary of Rs 24,000 and a commission of 10% on profit after charging such commission. Profit before salary is Rs 134,000. What is A's commission?

Answer and explanation

Correct answer: Rs 10,000

The governing concept is commission calculated after charging commission, after first allowing the stated salary. Profit after salary but before commission is Rs 134,000 − Rs 24,000 = Rs 110,000. Let commission be C. Since it is 10% of profit after charging commission, C = 10/100 × (110,000 − C). Thus 110C = 11,000,000, giving C = Rs 10,000. A check shows that Rs 110,000 − Rs 10,000 = Rs 100,000, and 10% of that is Rs 10,000. Therefore option A is correct; option C wrongly applies 10% before salary and commission.

Related tags

Commission After ChargingSalaryProfit AppropriationProfit DistributionPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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