A manager is paid 5% commission on the net profit after charging such commission. The gross profit of the firm is Rs. 40,000 and the selling expense is Rs. 29,500. His commission will be

The correct answer is A. Rs. 1,050.

The net profit is the gross profit minus the selling expense. In this case, the net profit is 40,000 – 29,500 = Rs. 10,500.

The manager is paid 5% commission on the net profit. This means that his commission is 5/100 * 10,500 = Rs. 525.

However, the commission is charged on the net profit after charging such commission. This means that the manager’s commission is actually 525/100 * 95% = Rs. 1,050.

Here is a brief explanation of each option:

• Option A: Rs. 1,050 is the correct answer.
• Option B: Rs. 2,100 is incorrect. This is the amount of commission that the manager would receive if he was paid 5% commission on the gross profit.
• Option C: Rs. 500 is incorrect. This is the amount of commission that the manager would receive if he was paid 5% commission on the selling expense.
• Option D: Rs. 1,000 is incorrect. This is the amount of commission that the manager would receive if he was paid 5% commission on the net profit before charging such commission.