Mango Stall Profit Target
A fruit seller buys 125 kg of mangoes at ₹45 per kg and pays ₹360 for transport. While sorting, 8% of the mangoes are too ripe to sell. The seller sells the remaining mangoes at ₹60 per kg before GST. Customers pay 5% GST on the selling price, but the seller must remit that GST to the government, so it is not part of profit. The seller gives a 2% discount on the pre-GST price to a school canteen that buys 30 kg of the sellable mangoes; the rest are sold at full price. The seller wants a profit of at least 20% on total cost. A helper calculates profit using the GST-inclusive amount and concludes the target is easily met. The seller asks you to separate GST, include the discount correctly, and decide whether the target is actually met.
1. Find the total cost, the sellable quantity, and the pre-GST revenue after the canteen discount.
Read the worked answer
Total cost=125×45+360 =5625+360=₹5,985.
Spoilage=8% of 125=10 kg. Sellable mangoes=125-10=115 kg.
Canteen sale: 30 kg at a 2% discount on ₹60. Discounted price=60×(1-0.02)=60×0.98=₹58.80 per kg. Canteen revenue=30×58.80=₹1,764.
Remaining sellable mangoes=115-30=85 kg. Full-price revenue=85×60=₹5,100.
Pre-GST revenue=1764+5100=₹6,864.
2. Calculate profit and profit percentage, and decide if the 20% target is met. Then explain why using GST-inclusive sales gives a misleading answer.
Read the worked answer
Profit=pre-GST revenue-total cost =6864-5985=₹879.
Profit percentage=879/5985×100≈14.69%. Required 20% profit=0.20×5985=₹1,197. Actual profit is ₹879, so the seller is short by 1197-879=₹318. The target is not met.
GST collected=5% of 6864=₹343.20. GST-inclusive receipts=6864+343.20=₹7,207.20. If the helper uses this amount, profit appears to be 7207.20-5985=₹1,222.20, or about 20.42%. That is wrong because the GST is collected on behalf of the government and must be remitted; it is not the seller’s income.