Terms Related to Buying and Selling (Profit and Loss)

Cost Price (CP)

Cost price is the actual amount which is paid by the manufacturer to produce it or to provide the service.

Selling Price (SP)

It is the amount at which the product is sold in the market by the retailer.

Profit

After selling a product if the seller has some financial gains then it is said to be a profit.

Profit = SP – CP

\mathrm{Profit\ \%\ =\dfrac{Profit}{CP}\times100}

Loss

It is the financial negative revenue which a seller has to bear while selling the product.

Loss = CP – SP

\mathrm{Loss\ \%\ =\dfrac{Loss}{CP}\times100}

Example

If a shopkeeper bought 250 books for 75 each. He spent Rs. 500 on the binding of books. Then he sold it in Rs. 20000.  Calculate the profit or loss percentage.

Solution:

Price of 250 books = 250 × 75 = 18750

Cost price of books = 18750 + 500 = 19250

Sale Price = 20000 .

SP > CP so he made a profit.

Profit = SP – CP

= 20000 – 19250 =  Rs.750

 \mathrm{Profit\ \%\ =\dfrac{Profit}{C.P.}\times100}

 =\dfrac{750}{19250}\times100=3.90\%

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