Week 4

Profit and Loss

Profit and Loss are related to transactions involving buying and selling of articles.
In such transactions, sometimes a profit or gain is made and at other times
transactions result in a loss.
Profit and Loss are always expressed as percentages.
 Buying Price (BP) or Cost Price (CP) is the price at which a business person
acquires and article.
 Selling Price (SP) is the price at which the article is sold to the consumer.
 A Profit (P) is made if the SP is greater than the BP i.e. if the SP > BP.

P = SP – BP
Generally,

𝑃
Percent Profit = (𝐵𝑃 × 100) %

 A Loss (L) is made if the SP is less than the BP

i.e. if SP < BP

L = BP – SP
Generally,
𝐿
Percent Loss = (𝐵𝑃 × 100) %

Example 1:- Given BP and SP, to find the percentage Profit and Loss.

A business woman bought 50 jerseys for $ 25, 000. She sold 40 of them at $ 850
each. Ten were soiled and she sold them at $ 480 each. Find the percentage profit
or loss on the deal.

Solution:

BP for 50 jerseys = $ 25, 000.

SP for 40 jerseys at $ 850 each = $(850 × 40)

=$ 34, 000

SP for 10 soiled jerseys at $480 each =$(480 × 10)

 = $ 4,800

Total SP for 50 jerseys = $(34, 000 + 4,800)

= $ 38, 800

Since SP > BP then the businesswoman made a profit.

Profit (P) = SP – BP

=$ (38, 000 – 25,000)

=$ 13, 800

𝑃
% Profit = (𝐵𝑃 × 100)

13800
= (25000 × 100)

138 ×2
= 5

276
= 5

= 55.2 % (profit)

Example 2:- Given BP and percent Profit or Loss, to find SP

A shopkeeper bought a stove for $ 15, 000 and sold it to a consumer at a profit of
25%. Find the price the consumer pays for the stove.

Solution:

BP for stove = $15, 000

Since 25% profit was made

Then Profit (P) = 25% of $ 15, 000

25
= $ (100 × 15000)

= $ 3, 750

SP = BP + P

= $ (15000 + 3750)
 = $ 18, 750

Alternatively

BP = $15,000 =100%

P = 25 %

∴ SP = 125 %

15000
=$( × 125)
100

= $ 18, 750.

Example 3: Given the SP and percent profit or loss, to find BP.

A vendor bought 100 pairs of boots. He later realised that the boots were out of
style and had to sell them off cheaply at $ 500 per pair. He made a loss of 20 %.
How much did he buy the 100 pairs of boots for?

Solution:

SP for 100 pairs of boots at $ 500 per pair = $ (500× 100)

= $ 50,000

Since he made a loss of 20%

Then SP represents 80% of BP

BP is always taken as 100%

50000
∴ BP = $ ( × 100)
80

= $ 62, 500

Vendor paid $ 62, 500 for the 100 pairs of boots.

  Checkpoint

 Profit and Loss is always calculated as a percentage of the Buying Price (BP)
 Buying Price is always represented as 100%

 When there is a Profit, SP=BP+P

 When there is a Loss, SP=BP-L

 Activity 1a  20 Minutes

A shop keeper bought a 25 kg bag of potatoes for $2, 000. He sold the potatoes
at $100 per kg. Find his percent profit or loss.

1. A bicycle which was bought for $ 5, 500 was sold at a profit of 30%. Find the selling
price of the bicycle.
2. A business woman bought 50 shirts from a manufacturer. She sold the shirts at $
800 each. Calculate the cost price of the shirts if:

(a) she made a loss of 20 %

(b) she made a profit of 25 %
(a) Discounts

A discount means that the consumer pays less than the marked price for
an article. Usually, when there is a SALE, consumers are offered a discount
on goods purchased. This is a means of encouraging consumers to make
purchases. The discount is always given and a percent of the marked
price.

Example 4: Given the marked price and the percent discount, to find the
discount price.

The marked price of a skirt is $ 4,500. At a sale, where there was a 10%
discount on all items, how much did Mary actually pay for the skirt?

Solution:

Marked price = $ 4, 500

% discount = 10 %
Actual discount = 10% of marked price
10
= $ (100 × 4500)

= $ 450

∴ Discount price = $ (4500 – 450)

= $ 4050
∴ Mary actually paid $ 4050 for the skirt.

Alternatively:

Since there was a 10 % discount

Then discount price will be 90% of marked price

∴ Discount price = 90% of $ 4,500

 90
= $ (100 × 4500)

= $ 4,050

Example 5: Given the discount price and the percent discount, to find the
marked price.

Sam paid $ 38,000 for a living room suit, which was sold at 5% discount.
Calculate the marked price of the suit.

Solution:
Since there was a 5% discount
Then Sam paid 95% of the marked price
∴ $ 38,000 = 95% of marked price

38000
∴ Marked price = $ ( × 100)
95

= $ 40,000

Example 6: Given the marked price and the discount price, to find the %
discount.

At a sale, John paid $ 3,465 for a bag which was marked at $ 3,850.
Calculate the percent discount.

Solution:
Marked price = $ 3,850
Discount price = $ 3,465
Actual discount = $ (3850 – 3465)
= $ 385

385
∴ % discount = 3850 × 100

= 10%
 Checkpoint

 Increase or Discount is always given as a percentage of the Original

value or marked price.

 Original value or marked price is always taken as 100%

 Actual increase = New value – Original value

 Actual discount = Marked price – discount price.

 Activity 1b  30 Minutes

1. A teacher’s salary was $ 28,000. He was given an increase of 5% on his

salary. Calculate his new salary.
2. The marked price of a bicycle was $ 90,400. Because Ms. Henry bought
the bicycle for cash, she actually paid $ 81,360. Find the % discount Ms.
Henry received.
3. Given Discount price = $8,075 and percent discount = 15%, calculate
Marked price.
4. A baby’s weight was 4kg at birth. His weight on his first birthday was 6.5
kg. Calculate the percent increase in weight.

Hire Purchase (H.P)

Some business places offer hire purchase arrangements to consumers

who cannot make cash payments for articles they need. It is very
 common for consumers to buy household furniture by hire purchase
arrangement.

Hire purchase is a legal agreement between the consumer and the

business company to allow the consumer to use the item while it is paid
for over several weeks or months. Sometimes, an initial down payment
must be made before the article can be taken away. There is always an
extra cost for hire purchase.

The consumer becomes the full owner of the article only after all the
weekly or monthly instalments have been paid.

Example 1.

A television set can be bought for $56 000 cash. It can also be bought on hire
purchase by making a down payment of 15% of the cash price followed by
24 monthly instalments of $3 000 each.

Calculate:

(i) The down payment

(ii) The total instalments
(iii) The hire purchase price
(iv) The extra cost as a percentage of the cash price

Solution:

(i) Down payment = 15% of cash price

15
= × 56 000
100

= $8 400

(ii) Total instalments = $(24 × 3000)

= $12 000

(iii) H.P price = Down payment + Total instalments

= $(8 400 + 72 000)
= $80 400

(iv) Extra cost = $(80 400 – 56 000)

= $24 400
 24 400
% extra = 56 000 × 100

= 43 4/7 %

Example 2.

A bed can be bought for $35 000 cash. It can also be bought on hire purchase
by making a down payment of 20% of the cash price. Interest at a rate of
25% of the cash price is then added to the outstanding balance and this
must be paid in 15 equal weekly instalments.

Calculate:

(i) The down payment

(ii) The interest charged
(iii) The total amount which must be paid by instalments
(iv) The value of each instalment
(v) The H.P price

Solution:

(i) Down payment = 20% of cash price

20
= × 35 000
100

= $7 000

(ii) Interest charged = 25% of cash price

25
= × 35 000
100

= $8 750
(iii) Total instalments = Outstanding balance + Interest
= $(20 000 + 8 750)
= $36 750

$36 750
(iv) Value of each instalment =
15
 = $2 450

(v) H.P price = Down payment + Total instalments

= $(7 000 + 36 750)
= $43 750

 Activity 3a  30 Minutes

(1) The marked price of a computer is $90 000. If it is bought for cash, a
5% discount is given. It can also be bought on hire purchase by
making a down payment of 20% of the cash price and 18 monthly
instalments of $6 500.
Calculate:
(i) The down payment
(ii) The total instalments
(iii) The H.P price
(iv) The actual amount you will have to pay for the computer if you buy
it for cash.

(2) The cash price for a table is $39 000. The hire purchase price is $46
800. If the table is bought on hire purchase, a down payment of 25%
cash price must be made and the balance must be paid in 10 equal
monthly instalments.
(i) Find the difference between the cash price and the hire purchase
price.
(ii) Express the difference as a percentage of the cash price.
(iii) Calculate the amount of each instalment.
(c)

Answers to Consumer Arithmetic)

 Activity 1a.

(1) 25% profit

(2) $7 150
(3) (a) $50 000
(b) $32 000
(1) $40 000

Activity 1b.

(1) $29 400

(2) 10%
(3) $9 500
(4) 62.5%

Activity 3a.

(1) (i) $18 000

(ii) $117 000
(iii) $135 000
(iv) $85 500
(2) (i) $7 800
(ii) $20%
(iii) $2 925