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A gets salary Rs 36,000 and twelve percent commission on profit after charging such commission. Profit before salary is Rs 260,000. What is the commission?

Answer and explanation

Correct answer: Rs 24,000

The governing concept is commission calculated on profit after charging that commission, with salary deducted before determining the commission base. Profit before salary is Rs 260,000, and A’s salary is Rs 36,000, so profit before commission is Rs 260,000 − Rs 36,000 = Rs 224,000. Since commission is 12% after charging commission, the commission-inclusive base represents 112%; therefore commission = Rs 224,000 × 12/112 = Rs 24,000. Verification: after deducting Rs 24,000, the remaining profit is Rs 200,000, and 12% of Rs 200,000 is Rs 24,000. Thus option A is correct. Option C applies 12% to the original profit, option D uses an incorrect denominator, and option B does not satisfy the after-charging condition.

Related tags

Commission After ChargingSalaryPartnership CalculationProfit DistributionPartnership AccountsPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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