Question

United Millers imports wheat from U.S.A at initial cost of 350 dollar per tone.The
shipping costs and customs duty are then charged as 25% and 15% respectively.
When the wheat reached Mombasa,an 8% of the initial cost is incurred to transport
it to Kisumu.
(a)Given that 1 US dollar = Ksh 82.40 ,calculate the total cost of importing 5 tonnes of
wheat in Ksh.
(b)The united millers intend to make a profit of 25%. Giving your answer to the
nearest ten cents,calculate the price at which a 2 kg packet of wheat should be
sold.
c.How much profit shall the company realize from the sale of 1 tonne of wheat.

Answer 1

(a) Total cost of importing 1 tonne: $350*(1+0.25+0.15+0.08)=\$518.$

Total cost of importing 5 tonnes: $518*5=\$2590.$

Total cost in Ksh: $2590*82.40=213416.$

(b) The price of 2 kg packet: $\frac{518(1+0.25)}{1000}*2=\$1.30.$

The price of 2 kg packet in Ksh: $1.30*82.40=107.10.$

(c) Profit from the sale of 1 tonne: $518*0.25=\$129.50.$

Profit in Ksh: $129.50*82.40=10670.80.$