PROFIT & LOSS

 Cost Price (CP): The price, which is paid to acquire a product, is called cost price. All the
overhead expenses (transportation, taxes etc.) are also included in the cost price.

 Selling Price (SP): The sum of money, which is finally received for the product i.e. the price
at which the product is finally disposed off is called the Selling price.

 Marked Price (MP): The price, which is listed or marked on the product, is also known as
quotation price/printed price/catalogue price/invoice price.

 Profit: If selling price is greater than Cost price, then excess of SP to CP is called Gain or
Profit.
PROFIT = SELLING PRICE – COST PRICE
E.g. Let the cost price of a quintal of rice be Rs 1000 and the shopkeeper sells the same for
Rs 1125 per quintal, then profit = 1125 – 1000 = Rs. 125 per quintal.

 Loss: If selling price is less than Cost price, then excess of CP to SP is called Loss.
LOSS = COST PRICE – SELLING PRICE
E.g. Let the cost price of a score of mangoes be Rs. 220. If the fruit vendor retails each
mango for Rs. 10, then cost price per mango = Rs. 220/20 = Rs. 11/mango (As you know one
score has 20 items)
Selling price = Rs. 10 / mango ∴ Loss = Rs. 11 – Rs. 10 = Re. 1 per mango

 Note: Profit and loss percentage is always calculated on cost price, unless otherwise
specified.

 Profit percentage formula: The profit percent can be calculated as:

Profit % = 100 × Profit/Cost Price.

 Percentage Loss: The loss percent can be calculated as;

Loss % = 100 × Loss/Cost Price.

 Now let us solve some illustration to get idea about profit and loss aptitude questions. These
illustrations will have the application of the profit and loss formula learned above.

 Discount (D) : The reduction in price offered by the seller is called discount.
D = MP – SP
Discount percent = (D / MP) x 100

 Profit or Loss is always calculated on the cost price. Discount is calculated on marked price
or list price.

 If two articles are sold at the same selling price, one at a gain of A% and one at the loss of
A%, then the seller always incurs a percentage loss of (A / 10)2.

 If a seller claims to sell at cost price but uses false weights, then
Profit percent = [ (True Value – Given Value) / Given Value ] x 100 %
 Illustration 1: An item is purchased for Rs. 1200 and is sold for Rs. 1400. How much profit is
made on the same?
Sol: As given CP = 1200, SP = 1400. Profit = SP – CP ⇒ 1400 – 1200 = Rs. 200.

 Illustration 2: A chair is purchased for Rs. 6500 and is sold for Rs. 7500. How much profit is
made on the same?
Sol: As given CP = 6500, SP = 7500. Profit = SP – CP ⇒ 7500 – 6500 = Rs. 1000.

 Illustration 3: A bottle is purchased for Rs. 80 and is sold for Rs. 65. What is his profit or loss
in Rs?
Sol: As given CP = 80, SP = 65. Profit = SP – CP ⇒ 65 – 80 = Rs. - 15. This is in negative, just to
convey that in this case, the person is making a loss. You can also apply loss = CP – SP
formula to find the loss in positive value. Otherwise just follow one formula remembering a
negative profit will always mean loss only.

 Illustration 4: A pen is purchased for Rs. 20 and is sold for Rs. 26. What is the percentage
profit earned?
Sol: Here CP = 20, SP = 26. Profit = SP – CP ⇒ 26 – 20 = Rs. 6.
Profit % = 100 × Profit/Cost Price ⇒ 100 × 6/20 = 30%.

 Illustration 5: A cup is purchased for Rs. 160 and is sold for Rs. 128. What is the profit or loss
percentage?
Sol: Here CP = 160, SP = 128. Profit = SP – CP ⇒ 128 – 160 = -32. Again a negative profit of 32
means it is a loss.
Profit % = 100 × Profit/Cost Price ⇒ 100 × (-32)/160 ⇒ = -20%.
So there is a loss of 20%.

 Illustration 6: Pranav sell an article at a discount of 80% and get a profit of 60% on that
article calculate the mark up over the cost price?

 Solution: Let us assume that Cost Price = Rs 100. So, Selling Price = Rs 160.
Now, after giving a discount of 80% over MP, Rs 160 is the SP.
Let the Marked Price: MP , SP = 20% of MP
160 = 20% of MP MP = 800 , % Mark Up = (700/100) × 100 = 700 %.

 Illustration 7: Mehak and Pranav sells some article for Rs 8000 each. Mehak calculates her
profit per cent on his CP and Pranav calculates his profit per cent wrongly on SP. What is the
difference in their actual profit if both claim to have a profit of 60%?
Solution: For Mehak : SP = Rs 8,000 : Profit = 60% of CP : CP = Rs 5000 : Profit = Rs 3000
For Pranav: SP = Rs 8,000 : Profit = 60% of SP = 60% of 8000 = 4800 : CP = Rs 3,200 : Profit =
Rs 4800 So, the difference in profit = Rs 1800

 Illustration 8: : Megha and Richa sold two articles at Rs 12,000 each. One is sold at a profit
of 20% and another one at a loss of 20%. What is the net loss?
Solution: For article-1: SP 1 = Rs 12,000 CP1 = Rs 12,000/1.2 = Rs 10,000
For article-2: SP2 = Rs 12,000 CP2 = Rs 12,000/0.8 = Rs 15,000
So, total CP = Rs 25,000 and total SP = Rs 24,000
So, loss = Rs 1,000.