The concept of Profit and Loss is used in our daily life, which is like we will buy some essentials goods from the shopkeeper and the shopkeeper will buy them either from the manufacturer or from wholesalers. After that, the shopkeeper will sell those goods for a higher price than they bought so that he can earn some profit.
We can see many business people follow these tactics to earn money by buying and selling goods. If the Selling Price is higher than the Actual Price or Cost Price, then he will get a profit. And if the Cost Price is higher than the Selling Price, he will get a loss. Here in this article, we will guide you on how to solve problems on Profit and Loss. In addition, you can get the Formulas for Profit and Loss along with Solved Examples.
Basics of Profit and Loss
Before stepping into the concept of Profit and Loss you need to know the fundamentals involved to calculate the Profit and Loss. They are Selling Price and Cost Price.
Cost Price(CP): Amount you usually pay to buy a product or commodity is called the Cost Price. It is in short represented as CP. In fact, CP is subdivided into two categories namely Fixed Cost and Variable Cost. The major difference between Fixed Cost and Variable Cost is that Fixed Cost remains unchanged under any circumstances whereas variable cost changes depending on the units.
Selling Price(SP): Amount for which the product is sold is referred to as Selling Price. It is represented as SP and is also called as Sale Price.
Profit: The amount gained by selling a product or commodity more than its actual price or cost price.
Loss: The Amount the Seller gets after selling a product less than its actual price.
Profit and Loss Formulas
The Formula for Profit and Loss with reference to Cost Price and Selling Price is given as such.
Profit(P)= Selling Price(SP)- Cost Price(CP)
Loss(L)= Cost Price(CP) – Selling Price(SP)
On the other hand formulas to determine the Profit %, Loss % is as such
Profit % = (Profit/Cost Price)*100
Loss % = (Loss/Cost Price)*100
Examples on Profit and Loss
1. The actual price of the book is Rs 60 and the shopkeeper sold the book for Rs 100. Find the profit that shopkeeper earned?
Solution:
The cost price of the book= Rs 60
The selling price of the book= Rs 100
Profit(P)= Selling price(SP) – Cost price (CP)
Applying the S.P and C.P of the book in the Profit Formula we have
= Rs 100 – Rs 60
= Rs 40.
Profit= Rs 40.
Therefore, Profit Gained by the Shokeeper on selling the book for 100 is Rs.40/-
2. A man bought a cycle for Rs 5000. After a year he sold it for Rs 4000. How much did he lose?
Solution:
The cost price of the cycle= Rs 5000.
The selling price of the cycle= Rs 4000.
Substituting the Cost Price and Selling Price of the cycle we get
Loss(L)= Cost Price(CP) – Selling Price(SP).
= Rs 5000- Rs 4000
= Rs 1000.
Loss = Rs 1000.
Therefore, the man had a loss of Rs. 1000/- on selling the cycle for Rs. 4000/-.
3. Consider a Shopkeeper bought 1kg of Apples for Rs. 80 and Sold it for Rs. 100 per kg. How much is the profit gained by him?
Solution:
Cost Price of Apples = Rs. 80
Selling Price of Apples = Rs. 100
Profit = S.P – C.P
= 100 – 80
= 20
Therefore, the shopkeeper gained a profit of Rs. 20/- on selling the Apples at Rs. 100/- per Kg.
4. Calculate the Profit% gained by the Shopkeeper for the above example?
Solution:
We know Profit Percentage = (Profit/Cost Price)*100
Profit = Rs. 20/-
Apply the Profit and Cost Price Values in the Formula for Profit %
Profit % = (20/80)*100
= 25
Therefore, the shopkeeper gained a 25 % Profit Percentage.