Bhajan Singh purchases 120 reams of paper at Rs. 80 per ream and also pays transport, octroi and coolie charges; if he wants an 8% profit on the whole lot, what should be his selling price per ream?

Introduction / Context:
This question is a standard profit and loss problem involving overhead expenses. The buyer not only pays the basic cost price for each ream of paper but also pays additional costs like transportation, octroi and coolie charges. The effective cost price per unit must include all these overheads. Only after computing the total cost can we determine the selling price per ream that will give the desired profit percentage.

Given Data / Assumptions:

• Number of reams purchased = 120.
• Basic cost price per ream = Rs. 80.
• Transportation cost = Rs. 280.
• Octroi rate = 40 paise (Rs. 0.40) per ream.
• Coolie charges = Rs. 72.
• Desired profit percentage on total cost = 8%.
• All reams are assumed to be sold at the same price per ream.

Concept / Approach:
The concept is to treat all expenses as part of the cost price. First we compute the total money spent on purchasing the paper and paying all related expenses. From this, we find the effective cost price per ream. Then, using the desired profit percentage, we compute the required selling price per ream. The formula used is: Required selling price per unit = Total cost * (1 + profit percentage / 100) divided by total number of units.

Step-by-Step Solution:
Step 1: Cost of 120 reams at Rs. 80 per ream = 120 * 80 = Rs. 9600.Step 2: Transportation cost = Rs. 280.Step 3: Octroi per ream = Rs. 0.40, so total octroi = 120 * 0.40 = Rs. 48.Step 4: Coolie charges = Rs. 72.Step 5: Total cost = 9600 + 280 + 48 + 72.Step 6: Compute the sum: 9600 + 280 = 9880; 9880 + 48 = 9928; 9928 + 72 = Rs. 10000.Step 7: Hence total cost price for the entire lot = Rs. 10000.Step 8: Desired profit = 8% of total cost.Step 9: Total selling price needed = 10000 * (1 + 8 / 100) = 10000 * 1.08 = Rs. 10800.Step 10: Selling price per ream = 10800 / 120.Step 11: 10800 / 120 = 90, so required selling price per ream = Rs. 90.

Verification / Alternative check:
To verify, we can check that selling at Rs. 90 per ream actually yields 8% profit. Total revenue = 120 * 90 = Rs. 10800. Profit = 10800 minus total cost 10000 = Rs. 800. Profit percentage = (800 / 10000) * 100 = 8%. This matches the required profit percentage, confirming that Rs. 90 per ream is correct.

Why Other Options Are Wrong:

• Rs. 89: If he sells at Rs. 89, total revenue is 120 * 89 = Rs. 10680, giving a profit of only Rs. 680, which is 6.8% profit, not 8%.
• Rs. 87.48: This is close to the effective cost per ream if profit were lower, but using this value would give less than 8% profit.
• Rs. 86: At Rs. 86 per ream, total revenue is 120 * 86 = Rs. 10320, profit = Rs. 320, which equals only 3.2% profit.

Common Pitfalls:

• Ignoring overheads like octroi and coolie charges and using only the basic purchase cost, which underestimates real cost price.
• Mistaking the profit percentage as applied per ream individually rather than on total cost.
• Carrying out division incorrectly when calculating the selling price per ream.

Final Answer:
Bhajan Singh should sell each ream at Rs. 90 to earn an 8% profit on his total investment.