The cost of manufacturing an article is made up of components A, B, C and D, which have a ratio of 1 : 2 : 3 : 4, respectively. If there are respective changes in the costs of these four components as -10%, +20%, +30% and -40%, then what would be the percentage change in the cost of the article?
Explanation:
Let the costs of components A, B, C and D be 100, 200, 300 and 400, respectively.
∴ Total cost = 1000.
Change in cost will be as follows. For A = -10% of 100 = -10 For B = +20% of 200 = +40 For C = +30% of 300 = +90 For D = -40% of 400 = -160
∴ Total change in cost = -10 + 40 + 90 – 160 = -40
∴ % change = (-40)/1000 × 100 = -4%
Hence, option (c).
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