Profit and Loss - A newspaper costs Rs 11 to print on a daily basis.......

1) A newspaper costs Rs 11 to print on a daily basis . Its sale price (printed) is Rs 3 . The newspaper gives a sales incentive of 40% on the printed price , to the newspaper vendors . The newspaper makes up for the loss through advertisements , which are charged on the basis of per column centimetre rates . The advertisement rates of the newspaper are Rs 300 per cc (column centimetre) . It has to give an incentive of 15% on the advertisement bill to the advertising agency . If the newspaper has a circulation of 12000 copies, what is the approximate minimum advertising booking required if the newspaper has a break-even on a particular day (Assume there is no wastage)

a)300 cc
b)350 cc
c)435 cc
d)450 cc

2) For above question if it is known that the newspaper house is unable to recover 20% of its dues, what would be the approximate advertising booking target on a particular day in order to ensure the break even point ?
a) 375cc
b) 438cc
c) 544cc
d) 562.5cc


Solution :
1)
Every paper is sold for Rs 3 and out of this 40% sales incentive so 60% is recovered out of Rs 3 i.e. Rs 1.8 so 11 - 1.8 is to be recovered from ads 9.2 Ads 15% is given to advertisement
So 75% is recovered. i.e. (0 .75 * 300 =255 ) so minimum cc for advertisement to overcome break-even point should be greater than (9.2*12000)/255
which is given by option C (435 cc)

2)
According to given condition 20% is not sold out.
So the loss which needs to be recovered is
11*0.2*12000 + 9.2*0.8*12000 =114720 (not sold + sold out).
This needs to be recovered from ads (114720/255=449) so to recover break even point the answer should be bigger than 449cc to recover break even point. the only option satisfy this is 544cc.