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It's only for knowledge Sharing, if any wrong in question please let me know.
must be Option B i.e.2.5
Option-B,2.5 is a correct answer.
As this is margin, margin is always calculated on sales and in calculating margin sales is always considered as100%.
Sales = Cost + Profit
X =10 + (20% * X)
X =10 +0.2X
X -0.2X =10
X (1 -0.2) =10
0.8X =10
X =10/0.8
X =12.5
Sales is12.5, as profit is20% of sales
Profit =20% of12.5
Profit =2.5
2.5 andswer is B
is
B:2.5
B2.5
To determine the Profit Amount, I will calculate the sales price, which is as follow
Sales price = cost of sales +cost of sales * profit margin
Sales price= 10+(10*.2)
Sales price= 10+2
Sales Price= 12
Hence Profit Amount is2 (=12-10)
Note: it is little bit tricky question