Here we can use the formula

$$\begin{gathered} \text{Average (A)=}\frac{\mathrm{Sum} \mathrm{of} \mathrm{observations} \left(\mathrm{S}\right)}{\mathrm{No}. \mathrm{of} \mathrm{observations} \left(\mathrm{N}\right)} \\ \text{⇒ S=A×N} \end{gathered}$$

According to the question,

Sum of cost of 49 pens and a pencil (A=63, N=50)

⇒S=63 X 50 =3150

Later, Cost of the pencil is removed, average drops down by 1. (so A=62, N=49)

So, sum of cost of 49 pens

⇒S=62 X 49 =3038

Now,

The cost of the pencil =(sum of cost of 49 pens and a pencil)-(Sum of cost of 49 pens)

=3150-3038

=112

Hence, Option B is correct.