Final answer:
The handicrafts manufacturer should sell the piece of pottery for ₹910 to make a 40% profit, by adding the 40% profit of ₹260 to the total production cost of ₹650.
Step-by-step explanation:
To find the selling price of the pottery that yields a 40% profit, one must first calculate the total cost of production. This includes the cost of raw materials, labour, and overhead expenses. The next step is to determine the desired profit by calculating 40% of the total production cost. Finally, add this amount to the total production cost to find the selling price.
In the given scenario, the total cost is calculated as follows: ₹500 for raw materials, ₹100 for labour, and ₹50 for overhead expenses, summing up to ₹650. To achieve a 40% profit, the manufacturer must calculate 40% of ₹650, which is ₹260. This profit is then added to the initial total cost to determine the selling price.
Therefore, the selling price of the pottery should be ₹650 (total cost) + ₹260 (40% profit) = ₹910.