3 Dec 2015

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Basics of Profit and Loss

Basics of Profit and Loss:


Questions based on Profit and loss are asked a number of times in exams.In this post we will learn the basics of Profit and loss problems. Before Coming to questions first we need to learn token terms of Profit and Loss.

Cost Price:

The price, at which an article is purchased, is called its cost price, abbreviated as C.P.

Selling Price:

The price, at which an article is sold, is called its selling prices, abbreviated as S.P.

Profit or Gain:

If S.P. is greater than C.P., the seller is said to have a profit or gain.

Loss:

If S.P. is less than C.P., the seller is said to have incurred a loss.

so Profit is a state in which we get some money as margin whereas loss is a state in which we have to shed money.

IMPORTANT FORMULAE :

 

  • Gain = (S.P.) - (C.P.)

  • Loss = (C.P.) - (S.P.)

  • Loss or Profit Percentage is always calculated on C.P until or unless specified.

  • Gain % = (Gain x 100)/C.P

  • Loss % = (Loss x 100)/C.P

  • Selling Price (Profit)
    Selling Price = {(100+Gain %)/100} x C.P

  • example- selling price of product when gain % is 30% = 1.3C.P(1.3 times Cost Price).

  • Selling Price (Loss)
    Selling Price = {(100-Gain%)/100} x C.P

  • example- selling price of product when loss % is 30% = 0..7C.P(0.7 times Cost Price).


We have learned the Basic concept of Profit and Loss. Now let us solve a problem based on it.

Q.Alfred buys an old scooter for Rs. 4700 and spends Rs. 800 on its repairs. If he sells the scooter for Rs. 5800, his gain percent is?

A. As per The question we are given with Cost Price of the scooter i.e C.P=4700+800. so the C.P =Rs.5500.
and Selling price of the product i.e S.P=Rs.5800.

S.P > C.P   Profit = S.P - C.P    = 5800-5500=300
Profit in terms of Rs.=300.

Profit %=(Profit x 100)/C.p= (300 x100)/5500.
Profit % = 300/55.

Let us take another example.

Q. An article was purchased for Rs. 78,350/-. Its price was marked up by 30%. It was sold at a discount of 20% on the marked up price. What was the profit percent on the cost price?

A. Cost Price = 78,350/-
Marked Price = {(30+100)/100} x C.P = 1.3 x C.P
Marked Price = 1,01,855/-
selling Price = 0.8 x C.P = 81,484/-.
Profit = 81,484-78,350= 3134.
therefore, Profit % =(3134/78350) x 100= 4%.

The above question can also be solved by using discount formulae. which we will discuss in our next post.solving Problems on Discounts

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