Table of contents  
Introduction  
Profit, Loss, and Discount  
Profit and Loss Common Formulas  
Profit and Loss Tricks  
Some Solved Problems 
The amount paid for a product or commodity to purchase it is called a cost price. Also, denoted as CP.
This cost price is further classified into two different categories:
Profit: When an article is sold for more than the cost of the article, then we say there is a Profit or Gain.
Loss: When an article is sold for less than the cost of the article, then we say there is a Loss.
The formula for the profit and loss percentage is:
This is basically labeled by shopkeepers to offer a discount to the customers in such a way that,
You have learned until now how to calculate profit as well as loss and also the percentage of them. Here is a list of the most commonly used formulas for all related questions:
Now let us look at some additional tricks or formulas that can be used to solve maths problems based on gain and loss:
To understand the concept let's first open a shop say a local retail stationery shop.
Example 1: Now suppose a student shows up and wants to buy 5 gel pens worth ₹ 5 each. The cost price of one pen is ₹ 4. So, what is the profit earned by the shopkeeper in net terms and its profit percentage?
This ₹ 5 is the selling price, the price at which the commodity is sold to its buyer. And ₹ 4 is the price at which the shopkeeper has bought these pens from his supplier and this price is known as Cost Price.
Thus, this difference between the price at which the shopkeeper buys his pen and at which it is sold is known as profit/ loss earned. Now if Selling Price > Cost Price then he will earn profit and if Selling Price < Cost Price, then he will earn loss.
Therefore, Profit = Selling Price – Cost Price = ₹ 5 – ₹4 = ₹1 per pen
Now,
i.e.
And consequently, Loss = Cost Price – Selling Price
i.e.
Example 2: Suppose another customer comes to the shop and bought 2 registers worth ₹ 50 each and a pencil box from him. And this time the shopkeeper has earned 40% profit on the registers. He earned a profit of ₹10 on pencil box and the profit% on pencil box is 20%. Then what is the cost price and profit on register and selling price and cost price of pencil box?
In this case, we are given S.P. = ₹ 50 for each register and profit% = 40%. Let C.P. be x.
⇒ Profit % = {(50 – x)/x} * 100
⇒ 40 = {(50 – x)/x} * 100
⇒ 4x = 500 – 10x
⇒ 14x = 500
⇒ x = 35.71
⇒ Profit = 50 – 35.71 = 14.29What if the profit of 40% is on selling price instead?
⇒ Profit = profit% * S.P = 0.4* 50 = ₹20
C.P. = S.P. – Profit = ₹50 – ₹20 = ₹30Let's now move on to calculate S.P. and C.P. of pencil box. Let C.P. of pencil box be y
∵ Profit % = (profit/ Cost price) *100
⇒ 20 = (10/y) *100
⇒ 2y = 100
⇒ y = ₹ 50
Therefore, S.P. = ₹50 + ₹10 = ₹60
Example 3: Since not many customers showed up on the first day of the shop. Therefore, to popularize the shop the shopkeeper puts up discount of 20% on all the products. The first customer shows up and bought a packet of pencils and 3 erasers and still making up the profit of 30% on both the items. Then what is the actual cost price of both the items when the pencil is marked as ₹30 and the eraser ₹ 5 each?
What does the underlined marked mean?
Here marked means Marked Price is the price that is offered to customer before discount basically, discount is just difference between marked price and Selling price i.e. Discount = M.P. – S.P.
In this case, Discount = 0.2 * Price of packet of pencil = 0.2 *30 = ₹ 6
Therefore, S.P = 30 – 6 = ₹ 24
∵ Profit is 30% on C.P., assume C.P. be x
⇒ 0.3 = (24 – x)/x
⇒ 0.3x = 24 – x
⇒ 1.3x = 24
⇒ x = 18.46
Similarly,
Discount = 0.2 * Price of 3 erasers = 0.2* 3*5 = ₹ 3
Hence, S.P. = (3*5)  3 = ₹ 12
∵ Profit is 30% on C.P., assume C.P. be y
⇒ 0.3 = (12 – y)/y
⇒ 1.3y = 12
⇒ y (C.P. of 3 eraser) = 9.23
The above method of solving questions was a direct straightforward way of finding the solution. There's also an alternative way of doing so. Let's now learn that alternative method but this time instead of earning profit the seller was earning the loss.
Example 4: Consider this situation, that the stationery sold a parker pen at a loss of 20% for ₹ 100 and a pack of colored sketch pens at the loss of 15% on S.P. What are the cost price and selling price of both the articles?
First, let's find out the C.P. and S.P. parker pen,
∵ Loss is 20% on C.P.
Let C.P. be x and S.P. be 100
⇒ S.P. = 0.8 of C.P.
⇒ 100 = 0.8x
⇒ 100/0.8 = x
⇒ 125 = x
For sketch pens,
∵ Loss is 15% on S.P.
Let S.P. be y and C.P. be 100
⇒ Loss = 0.15y
⇒ C.P. = 1.15 y
⇒ 100 = 1.15y
⇒ 100/1.15 = y
⇒ y = ₹ 87
The problems explained above are rather simple and easy ones. Now let's do some problems that are bit complex and have come up in the previous year's CAT exam.
Example 5: A watch dealer incurs an expense of Rs. 150 for producing every watch. He also incurs an additional expenditure of Rs. 30,000, which is independent of the number of watches produced. If he is able to sell a watch during the season, he sells it for Rs. 250. If he fails to do so, he has to sell each watch for Rs. 100. If he is able to sell only 1,200 out of 1,500 watches he has made in the season, then he has made a profit of:
(a) ₹ 90000
(b) ₹ 75000
(c) ₹ 45000
(d) ₹ 60000
This question is not basic and direct as the problems given above. This one came in CAT 2016 paper and you should expect to get this level of questions in the exam and not the ones explained above earlier. Now let's see how to solve this problem
Here, first find out cost he has incurred to produce the watches.
∵ He made 1500 watches costing ₹ 150 each and an additional ₹ 30000 expense on them.
⇒ Total Cost = (1500*150) + 30000 = ₹ 255000
∵ He's able to sell 1200 watches in the season = ₹250 each
So, the revenue earned by him during the season = ₹250 * 1200 = ₹ 300000
Also, the leftover 300 pieces of clocks would have been sold by the watchmaker in offseason = 100 each.
Revenue earned through these 300 watches = 300*100 = ₹ 30000
Total Revenue = ₹ 300000 + ₹30000 = ₹330000
Profit = Revenue  Cost = 330000  255000 = ₹ 75000
Example 6: Instead of a meter scale, a cloth merchant uses a 120cm scale while buying, but uses an 80cm scale while selling the same cloth. If he offers a discount of 20% on cash payment, what is his overall profit percentage?
This question above is a special one with the faulty dealer. Here, the dealer is earning profit by using a false scale.
To solve this problem, first assume that the price of the cloth is ₹ 1/cm
∵ He's using a 120 cm scale.
⇒ C.P. = (100/120) * ₹1 = ₹ 0.8333/cm
∵ This merchant again uses faulty scale to sell the cloth to his customers. He uses a scale that measures 80cm as 100cm i.e. he sells 80cm for ₹100
Now he also gives a discount of 20% on the cloth.
⇒ His mark up price is ₹100/80cm
∵ S.P. = M.P.  M.P. * Discount% = M.P. (1  Discount%) = (100/80)*(80/100) = ₹1/cm
Therefore, his profit % = (1 – 0.8333)/0.8333 *100 = 20%
207 videos156 docs192 tests

1. What is the basic concept of profit, loss, and discount? 
2. What are some common formulas used in profit and loss calculations? 
3. What are some tricks to solve profit and loss problems quickly? 
4. Can profit and loss problems be solved using algebra? 
5. How can understanding profit and loss help in everyday life? 
207 videos156 docs192 tests


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