Profit and Loss - Orchids The International School
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Money

Profit and Loss

  • The terms related to selling or buying items are:
    • Cost Price
    • Selling Price
    • Marked Price
    • Discount
    1. Cost Price: The item at which the article is bought or the amount which is required to make an article is called the cost price.

      The cost price is abbreviated as “CP”.

    2. Selling Price: The amount at which the product is sold is called the selling price of the article.

      The selling price is abbreviated as “SP”.

    3. Marked Price: The amount which is set by the seller as the label of the article is called the marked price.
      The marked price of the article is generally more than the cost price.

      It is abbreviated as “MP

    4. Discount: The amount which is offered by the seller to reduce the selling price is called the discount.
  • While selling an article three conditions may arise:
    • Cost Price is less than selling price, i.e., C.P < S.P
    • Cost price is more than the selling price, i.e., C.P > S.P
    • Cost price is equal to the selling price, i.e., C.P = S.P.
  • Based on this condition the seller either makes a profit or a loss.

Profit

  • Profit means a gain in amount.
  • When the cost price is less than the selling price then we earn a profit.
  • The formula to calculate the profit is “Profit = Cost price – Selling Price”.
Boy

Example: The cost price of an article is Rs 74 and the selling price is Rs 86 each. Find the profit made in selling 23 such articles.

Solution:

Step 1: The cost price of an article is Rs 74.

Multiply 74 by 23 to get the cost price of 23 articles.

74 × 23 = 1,702

Step 2: The selling price of an article is Rs 86.

Multiply 86 by 23 to get the selling price of 23 articles.

86 × 23 = 1,978

Step 3: Subtract 1,702 from 1,978 to get the profit.

1,978 – 1,702 = 276

Therefore, the profit made in selling 23 articles is Rs 276.

Loss

  • Loss means losing an amount.
  • When the cost price is more than the selling price then we suffer loss.
  • The formula to calculate loss is “Loss = Cost Price – Selling Price”.
Boy

Example: Bhavan bought 20 boxes of gifts for Rs 1,642. He sold each box for Rs 58. Find the loss or profit made by him.

Solution:

Step 1: The selling price of 1 box = Rs 58.

Number of boxes = 20

Total selling price = 58 × 20

                                  = 1,160

Step 2: The cost price of 20 boxes = Rs 1,642.

The selling price of 20 boxes = Rs 1,160

Loss = 1,642 – 1,160

          = 482

Calculation of Selling Price

  • If a seller provides a discount on the marked price, then the selling price is calculated as “Selling Price = Marked Price – Discount”.
    Boy

    Example: The marked price of the washing machine was Rs 29,780. The shopkeeper offers a discount of Rs 5645 as a “Diwali Sale”. Calculate the selling price of the washing machine.

    Solution:

    Marked Price = Rs 29,780.

    Discount = 5645

    Selling Price = 29,780 – 5645

                            = 24,135

  • If the cost price and the profit are given then the selling price is calculated as “Selling Price = Cost Price + Profit”.
  • If the cost price and the loss is given then the selling price is calculated as “Selling Price = Cost Price – Loss”.
  • Boy

    Example: The cost price of the articles is Rs 24,906. The man sold the articles in a loss of Rs 904. Find the selling price

    Solution:

    Coat Price of an article = Rs 24,906.

    Loss = 904

    Selling price = Rs 24,906 – 904

                           = Rs 24,002

Calculation of Cost Price

  • If an additional amount is spent on repairing or modifying an article then the total cost price of an article is equal to the sum of the price at which the article is bought and the additional price which is spent on the article”.
    Boy

    Example: A man bought a motorbike for Rs 25,000. He spent Rs 3500 on paperwork, and Rs 7000 for changing the motor parts. At what price should he sell the motorbike to make a profit of Rs 3000.

    Solution:

    Step 1: Amount spend on paper work = 3500
    Amount spend on motor parts = Rs 7000
    Total additional cost = Rs 3500 + Rs 7000 = Rs 10,500

    Step 2: Cost price of the motorbike = Rs 25,000.
    Additional cost = Rs 10,500
    Total cost price = Rs 25,000 + 10,500 = Rs 35,500

    Step 3: Total cost price = Rs 35,500
    Profit = Rs 3000
    Selling Price = Rs 35,500 + Rs 3000
                            = Rs 38,500

  • If the selling price and the profit are given then the cost price is calculated as “Cost Price = Selling Price – Profit”.
  • If the selling price and the loss are given then the cost price is calculated as “Cost Price = Selling Price + Loss”.
Boy

Example: A man makes a profit of Rs 2768 in selling 20 articles for Rs 54 each. Calculate the cost price of the article.

Solution:

Step 1: Selling Price of an article = Rs 54.
Number of articles = 20
Total selling price = 54 × 20
                                  = 1080

Step 2: Selling Price of the article = Rs 1080
Profit = Rs 2768
Cost price of an article = 1080 + 2768
                                           = Rs 3,848

Multiple Transaction

Example:

Rahul sold a bicycle to Banu at Rs 5780 thereby making a profit of Rs 700. Banu sold it Harika at the loss of Rs 850. Find the cost price of the bicycle for Rahul and Harika.

Solution:

Step 1: The selling price for Rahul = Rs 5780
Profit made by Rahul = Rs 700
Cost price of Bicycle for Rahul = Rs 5780 – Rs 700
                                                         = Rs 5080

Step 2: The selling price for Rahul is equal to the Cost price of the Bicycle for Banu.
Therefore, the Cost price of the Bicycle for Banu = Rs 5780.
Loss = Rs 850
Selling Price of Bicycle for Banu = Rs 5780 – Rs 850
                                                             = Rs 4,930
The selling price for Banu is equal to the cost price for Harika.
Therefore, the cost price of a bicycle for Harika = Rs 4,930.

Boy
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