Answer

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**Hint:**For solving this question you should know about the gross profit and discount percentage of any product. We will first clear about the gross profit percentage and then we will find the selling price after calculating the discount price. But the gross profit percentage will be used to clear all these types of problems.

**Complete step by step answer:**

According to our question it is asked of us to find the selling price of a chair. If we see the definition of gross profit percentage, then the gross profit percentage is the margin earned (in a form of percentage) on a product or service after applying the total production cost to the revenue earned. The total cost includes the cost of labour and materials and overheads. So, the gross profit percentage helps to identify the probability of the organisation’s products or services and is often time leveraged as a benchmark against competitor or industry standards.

If we use the mean of the gross profit percentage then the gross profit percentage is an easy calculation to determine the overall probability of an organisation’s product or services. Simply speaking, the percentage is a reliable indicator of the organisation’s competency when producing a good or service.

Now if we find how the gross profit percentage is used and calculated, the GPP is calculated by the formula:

$100\times \left\{ \dfrac{\left( \text{Sales}-\left( \text{total labour+materials+overhead cost} \right) \right)}{\text{Sales}} \right\}$

If we look at an example:

Ram has a manufacturing company named A. He provides you the following figures related to the year 2019.

Opening stock 25,000

Purchase 3,00,000

Closing stock 15,000

Sales 4,00,000

Direct cost 20,000

To calculate the gross profit of a company A, we will first calculate the cost of the good sold.

Cost of goods sold = Opening stock + purchase + direct expenses - closing stock

= 25,000 + 3,00,000 + 20,000 - 15,000

= 3,33,000

Now we know that the sales = 4,00,000

So, the gross profit = 4,00,000 - 3,33,000 = 70,000

And the gross profit percentage = $\dfrac{70000}{400000}\times 100=17.5%$

Thus, this is how we calculate the GPP.

Now if we look at our question then,

Discount is always offered on market price.

Market price of chair = Rs.1200

Discount = 10%

Discount = $\dfrac{1200\times 10}{100}$ = Rs.120

Selling price = Market price - discount

= 1200 - 120

= Rs.1080

So, the original selling price is Rs.1080.

**Note:**while solving these types of questions you should know the formula of gross profit percentage and find the gross profit with the help of the correct formula very carefully. This is because if any term is wrong here, then that will make our complete solution wrong.

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