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Profit is Rs 3,80,000. After deducting A's salary of Rs 50,000, B is entitled to a 20% commission on the profit remaining after charging the commission. What is the commission?

Answer and explanation

Correct answer: Rs 55,000

Answer: A, Rs 55,000. First remove A’s salary from the stated profit: Rs 3,80,000 − Rs 50,000 = Rs 3,30,000. The phrase “after charging the commission” means B’s commission is calculated on the amount left after the commission itself has been deducted. Let the commission be C. Then C = 20% of (3,30,000 − C), so C = 0.20(3,30,000 − C). Expanding gives C = 66,000 − 0.20C, hence 1.20C = 66,000 and C = 55,000. A useful shortcut is commission = 20/(100 + 20) × 3,30,000 = 20/120 × 3,30,000 = Rs 55,000. B is simply 20% of Rs 3,30,000 and ignores the “after commission” wording. C is too large and does not satisfy the equation. D merely repeats the salary amount, which is unrelated to the required commission.

Related tags

Commission After ChargingPartnership ProfitProfit DistributionAccountancyPartnership Accounts Basic ConceptsClass 12 Mcq

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