International Price Change

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(CAT 1998)

A company purchases components A and B from Germany and USA respectively. A and B form 30% and 50% of the total production cost. Current gain is 20%. Due to change in the international scenario, cost of the German mark increased by 30% and that of USA dollar increased by 22%. Due to market conditions, the selling price cannot be increased beyond 10%.

1. What is the maximum current gain possible?
a. 10% 
b. 12.5% 
c. 0% 
d. 7.5%

2. If the USA dollar becomes cheap by 12% over its original cost and the cost of German mark
increased by 20%, what will be the gain? (The selling price is not altered.)
a. 10% 
b. 20% 
c. 15% 
d. 7.5%

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