Profit and Loss formula is used in mathematics to determine the price of a commodity in the market and understand how profitable a business is. Every product has a cost price and a selling price. Based on the values of these prices, we can calculate the profit gained or the loss incurred for a particular product. The important terms covered here are cost price, fixed, variable and semi-variable cost, selling price, marked price, list price, margin, etc. Also, we will learn the profit and loss percentage formula here. Show
For example, for a shopkeeper, if the value of the selling price is more than the cost price of a commodity, then it is a profit and if the cost price is more than the selling price, it becomes a loss. Here, in this article, we will discuss profit as well as loss concepts along with tricks to solve problems based on it. Table of Contents: Profit and Loss Basic ConceptsLet us learn profit and loss concepts in maths. It is well explained in terms of cost price and selling price. Profit(P)The amount gained by selling a product for more than its cost price. Loss(L)The amount the seller incurs after selling the product less than its cost price is mentioned as a loss. Cost Price (CP)The amount paid for a product or commodity to purchase is called a cost price. Also, denoted as CP. This cost price is further classified into two different categories:
Selling Price (SP)The amount for which the product is sold is called the Selling Price. It is usually denoted as SP. Also, sometimes called a sale price. Marked Price Formula (MP)This is basically labelled by shopkeepers to offer a discount to the customers in such a way that,
Profit and Loss FormulasNow let us find the profit formula and loss formula.
The formula for the profit and loss percentage is:
Also, read: Profit and Loss Examples
These are some common examples of the profit and loss concept in real life, which we observe regularly. Profit and Loss TricksYou have learned until now how to calculate profit, loss, and percentage of them. Now let us learn some tricks or formulas to solve maths problems based on gain and loss.
Let us explain the above-given formulas with examples. Solved ProblemsQ. 1: Suppose a shopkeeper has bought 1 kg of apples for 100 rs. And sold it for Rs. 120 per kg. How much is the profit gained by him? Solution: Cost Price for apples is 100 rs. Selling Price for apples is 120 rs. Then profit gained by shopkeeper is ; P = SP – CP P = 120 – 100 = Rs. 20/- Q.2: For the above example calculate the percentage of the profit gained by the shopkeeper. Solution: We know, Profit percentage = (Profit /Cost Price) x 100 Therefore, Profit percentage = (20/100) x 100 = 20%. Q.3: A man buys a fan for Rs. 1000 and sells it at a loss of 15%. What is the selling price of the fan? Solution: Cost Price of the fan is Rs.1000 Loss percentage is 15% As we know, Loss percentage = (Loss/Cost Price) x 100 15 = (Loss/1000) x 100 Therefore, Loss = 150 Rs. As we know, Loss = Cost Price – Selling Price So, Selling Price = Cost Price – Loss = 1000 – 150 Selling Price = R.850/- Q.4: If a pen cost Rs.50 after 10% discount, then what is the actual price or marked price (MP) of the pen? Solution: Since, we know; MP – D = SP where MP is marked price, D is discount, SP is selling price. Percentage discount, D% = D/MP x 100 ⇒ D = (D% x MP)/100 Substitute value of D in above formula. MP – (D% x MP)/100 = SP MP x (100-D%)/100 = SP Putting the given values in formula MP x (100 – 10) /100 = 50 MP x (90/100) = 50 MP = (50 x 100)/90 MP = Rs. 55.55/- Practice Questions
Download BYJU’S – The Learning App and get various interesting and interactive Maths video lessons. The profit is the amount gained by selling an article at a price greater than its cost price. In contrast, the loss is the amount lost by selling an article for less than its cost price.
The formula for profit = Selling price – Cost price The formula for loss = Cost price – Selling price In maths, CP represents the cost price, and SP denotes the selling price. CP can be calculated with the help of the formulas given below. CP (selling price) when profit% and selling price are given: CP = {100/(100 + P%)} x SP CP (selling price) when loss% and selling price are given: CP = {100/(100 – L%)} x SP We can calculate the SP (selling price) using the formulas given below. SP (selling price) when profit and cost price are given: SP = {(100 + P%)/100} x CP SP (selling price) when loss and cost price are given: SP = {(100 – L%)/100} x CP We experience different situations every day when we need to calculate or compare things. Especially situations involving the sale or purchase of goods. The selling price is used to sell the item at a certain cost and can be calculated using the selling price formula. The amount that the buyer pays to buy the product is called the selling price. The actual selling price is the price the buyer pays to buy a product or service. This is the price that is higher than the cost of goods and includes a profit percentage. If the seller wishes, they can also keep the selling price similar to the cost price, if the buyer does not wish to gain profit. Determining the selling price is a very sensitive issue because sales of a product are largely based on it. We can calculate the selling price in various ways and formulas. The Basic FormulaSP = CP + Profit Where, SP= Selling Price CP= Cost Price This chapter deals with selling price and its role in calculating the percentage of profit and loss. We also learn the difference between selling price and marked price. We also learn how to calculate the selling price of a product using different formulas. There are various examples that will help us understand better about the selling price of an object. Important Selling Price Formula
Other Important Formulas Related To Selling Price
Selling Price Vs. Marked PriceMarked price also known as the list price is the price that a seller spells out to the purchaser while selling price is the price that the seller actually receives from the buyer after a bargain or making a deal. In general, the selling price is lower than the marked price. However, sometimes the selling price and the marked price can be the same also. A fixed price shop, meaning that the shopkeeper that does not offer any discount or price cut of any sort is an example of it. Calculate Selling Price Per UnitFollowing is the step-by-step procedure to calculate the selling price per unit:
Thus, the selling price per unit formula to find the price per unit from the income statement, divide sales by the number of units or quantity sold to identify the price per unit. For example, given sales of $80,000 for the year and 2,000 units sold, the price per unit is Rs.40 (80,000 divided by 2,000). How to Calculate Cost-Plus PricingMarkup is the amount of difference between an item’s cost and its selling price. Usually, depending on the industry type, it is demonstrated as a percentage of the cost. Margin also referred to as Gross Profit) = Selling price – Cost of goods sold (COGS). Margin and Markup move in tandem. For example, a 40% markup is always equivalent to a profit margin of 28.6%, while a 50% markup is always equivalent to a margin value of 33%. Cost PriceCost price is actually the ultimate price at which the seller buys the product or service. He then adds a percentage of profit to it. The list price or marked price is the price which a seller fixes after adding the needed percentage of profit. Solved ExamplesExample: Maria marks all her products 30% above the cost price and offers a discount of 5% on the marked price. She is of the viewpoint that she will earn a profit of 20%. What do you think is the percentage of the profit she earns? Solution: Let the cost price of the products be 100. Thus, the list price/marked price will be = ₹100 + 30% of the cost price. = 100 + 30 = 130 Now, the Selling price = List/Marked price – Discount = 130 – 5% of 130 = 130 – 6.5 = 123.5 Therefore, the profit = SP-CP = 123.5 – 100 = 23.5 Hence, the percentage of profit she earned is below 20%. Example: A new retailer in the market marked all his goods at 50% above the cost price thinking that he will still earn a profit percent of 25%, offering a discount of 25% on the list price. Find out his actual profit on the sales? Solution: Let the cost price = Rs. 100 Then, list price = Rs. 150 Thus, Selling Price = 75% of Rs. 150 = Rs. 112.50. Hence we can conclude that the profit % he earned = 12.50%. |