A company imports component $A$ from Germany and component $B$ from USA. If then assembles them along with other components to produce a machine used in a chemical process. Component $A$ contributes $30$% to the production cost and component $B$ contributes $50$% to the production cost. The current practice is to sell the machine at a price that is $20$% over the production cost. Due to foreign exchange fluctuations the German Mark has become costlier by 30% and the US Dollar by $22$%. But the company is unable to increase the selling price by more than $10$%.
Suppose the US dollar becomes cheaper by 12% of its original value, and the German Mark becomes costlier by 20% of its original value. To achieve a profit margin of 10%, the selling price must exceed the production cost by
- $10$%
- $20$%
- $12$%
- $15$%