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MonographsHigh SchoolMathematicsCommercial Mathematics | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Created: 18 Aug, 2010; Last Modified: 29 Apr, 2018 Commercial Mathematics - 02Profit & LossCost Price, Selling Price, Profit & LossThe terms profit and loss are used in business transactions. A merchant buys goods at a price to sell to customers. The price at which he/she buys the goods is its cost price (C.P.). He/She sells the goods at a price to the customer, which is known as the selling price (S.P.). The difference between the selling price and the cost price determines the profit or loss the merchant makes. If S.P. > C.P., the merchant makes a profit of (S.P. – C.P.). If S.P. < C.P., the merchant makes a loss of (C.P. – S.P.). However, it is not enough to merely know the actual value of profit/loss – it is important to consider the size of profit/loss in proportion to the cost of the goods. For this reason, profit/loss is often determined as a percentage of the cost price. Hence, a profit of If the merchant makes a profit, the formula for calculating the profit percentage is:
.......(1)
If the merchant makes a loss, the formula for calculating the loss percentage is:
.......(2)
Of course, you can always use only Eq. , in which case if there is a negative value for the profit percentage, it is equivalent to a loss percentage. If toys are bought at C.P. of the toy =
I sell Let the cost of each article I purchased be x.
However,
Overheads , Discounts, Gross and NetAn overhead is the additional cost which is added to the C.P. of an item purchased by a merchant to arrive at a new C.P., which reflects the true cost incurred by him/her. These additional costs are a result of extra operations like transportation and storage of items. A discount is the reduction in the selling price of an item which a merchant offers to a customer. It is almost always expressed as a percentage of the advertised price, which is known as the marked price (M.P.) or list price (L.P.). The amount that the customer pays to the merchant after the discount (M.P. - discount) is called the net price, which is the S.P. of the item. So, an item which is available at a list price of Thus,
.......(3)
.......(4)
Sometimes, some merchants offer successive discounts on the M.P. In such cases, the first discount is calculated on the M.P. and is subtracted from it. The next discount is calculated on the resulting amount from the previous step and is again subtracted from it to yield the next amount of the article. These steps are continues till all discounts are used up, and the final amount obtained is the S.P. of the article. Gross profit is the total profit made by the merchant in a transaction, without deducting any taxes and/or expenses. After making the deductions for taxes and/or expenses from the gross profit, what remains is the net profit. The marked price of a book is M.P of the book Discount rate
S.P. (or net price) A shirt was sold for S.P of the shirt Let x be the M.P. of the shirt. We know that Thus, the M.P. of the shirt Feedback
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Otherwise, send an email to feedback@mentorials.com with subject line: "Feedback: Profit & Loss". List of ReferencesChakravarti, JC, Arithmetic, 55th edn, Kolkata, India: MC Chakravarti, 1992. NCERT, Mathematics – Textbook for Class IX, viewed 25 February, 2008, <http://www.ncert.nic.in/textbooks/testing/index.htm>, (n.d.). BibliographyChakravarti, JC, Arithmetic, 55th edn, Kolkata, India: MC Chakravarti, 1992.
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MonographsHigh SchoolMathematicsCommercial Mathematics | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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