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GMAT Exam  >  GMAT Notes  >  Quantitative Reasoning  >  Sample Previous Year Questions: Profit and Loss

Sample Previous Year Questions: Profit and Loss

Essential Formulae

  • Cost Price (CP): The price at which an article is purchased.
  • Selling Price (SP): The price at which an article is sold.
  • Profit = SP - CP, when SP > CP.
  • Loss = CP - SP, when SP < CP.
  • Profit percentage = (Profit / CP) × 100% = ((SP - CP) / CP) × 100%.
  • Loss percentage = (Loss / CP) × 100% = ((CP - SP) / CP) × 100%.
  • Marked Price (MP) and discount d%: SP = MP × (1 - d/100).

Sample previous-year questions

Q1. A man buys an article for $500 and sells it for $600. Find his profit percentage.
A. 15%
 B. 18%
 C. 20%
 D. 22%
 E. 25%
Ans: Option C

Explanation:

  1. Profit = SP - CP = 600 - 500 = 100.
  2. Profit% = (Profit / CP) × 100% = (100 / 500) × 100% = 20%.
Q2. A shopkeeper sells a shirt at a discount of 10% and still makes a profit of 20%. If the cost price is $400, find the marked price.
A. $480
B. $500
C. $520
D. $540
E. $560
Ans: Option D

Explanation:

  1. Required SP to make 20% profit on CP = 400 is SP = 1.20 × 400 = 480.
  2. Given SP is after 10% discount on marked price M, so 0.90 × M = 480.
  3. Therefore M = 480 ÷ 0.90 = 533.333... = $533 + 1/3.
  4. This exact value does not match any listed option. Nearest listed option is D: $540.
Q3. If a trader sells an article at 15% loss, and the selling price is $255, what was the cost price?
A. $270
 B. $290
 C. $300
 D. $320
 E. $340
Ans: Option C

Explanation:

  1. SP = 255 and SP = (100 - 15)% of CP = 85% of CP = 0.85 × CP.
  2. Thus 0.85 × CP = 255.
  3. CP = 255 ÷ 0.85 = 300.
Q4. A man sells two articles for $2,000 each. On one he gains 25% and on the other he loses 25%. Find his overall gain or loss percentage.
A. No profit, no loss
 B. 3.125% loss
 C. 3.125% gain
 D. 6.25% loss
 E. 6.25% gain
Ans: Option D

Explanation:

  1. Let the two articles have cost prices CP1 and CP2 and both are sold at SP = 2000.
  2. For the first: SP = 2000 and gain 25% ⇒ CP1 = SP ÷ 1.25 = 2000 ÷ 1.25 = 1600.
  3. For the second: SP = 2000 and loss 25% ⇒ CP2 = SP ÷ 0.75 = 2000 ÷ 0.75 = 2666.666... = 8000/3.
  4. Total CP = 1600 + 2666.666... = 4266.666... Total SP = 2000 + 2000 = 4000.
  5. Net loss = Total CP - Total SP = 4266.666... - 4000 = 266.666...
  6. Loss% = (266.666... / 4266.666...) × 100% = (266 2/3 ÷ 4266 2/3) ×100% = 6.25% loss.
  7. Alternate short derivation: For equal SPs, convert to CPs as above to compute overall loss precisely.
Q5. The cost price of 12 pens is equal to the selling price of 10 pens. Find the profit percentage.
A. 15%
 B. 18%
 C. 20%
 D. 25%
 E. 30%
Ans: Option C

Explanation:

  1. Let CP per pen = c and SP per pen = s.
  2. Given: CP of 12 pens = SP of 10 pens ⇒ 12c = 10s.
  3. Therefore s = (12/10) c = 1.2 c.
  4. Profit% = ((s - c) / c) × 100% = (0.2 c / c) × 100% = 20%.
Q6. A trader buys 50 kg of rice at $40 per kg and 50 kg at $50 per kg. He mixes both and sells the mixture at $48 per kg. Find his profit percentage.
A. 2%
 B. 4%
 C. 6%
 D. 8%
 E. 10%
Ans: Option C

Explanation:

  1. Total quantity = 50 + 50 = 100 kg.
  2. Total cost = 50 × 40 + 50 × 50 = 2000 + 2500 = 4500.
  3. Average (effective) CP per kg = 4500 ÷ 100 = 45 per kg.
  4. SP per kg = 48 per kg.
  5. Profit per kg = 48 - 45 = 3.
  6. Profit% = (3 / 45) × 100% = (1 / 15) × 100% = 100/15% = 20/3% = 6.666...% ≈ 6.67%.
Q7. An article is sold at 10% profit. If it had been sold for $10 more, the profit would have been 20%. Find the cost price.
A. $80
 B. $90
 C. $100
 D. $110
 E. $120
Ans: Option C

Explanation:

  1. Let CP = x.
  2. SP at 10% profit: SP1 = 1.10 x.
  3. SP at 20% profit (if sold for $10 more): SP2 = 1.20 x = SP1 + 10 = 1.10 x + 10.
  4. So 1.20 x - 1.10 x = 10 ⇒ 0.10 x = 10 ⇒ x = 100.
Q8. A trader marks goods 40% above cost and allows a discount of 10%. Find his profit percentage.
A. 26%
 B. 28%
 C. 30%
 D. 32%
 E. 34%
Ans: Option A

Explanation:

  1. Let CP = 100 (for ease of calculation).
  2. Then MP = CP × 1.40 = 140.
  3. Seller gives 10% discount: SP = 0.90 × MP = 0.90 × 140 = 126.
  4. Profit = SP - CP = 126 - 100 = 26.
  5. Profit% = (26 / 100) × 100% = 26%.
Q9. A trader sold an article for $2,000 and gained 25%. Find the cost price.
A. $1,400
 B. $1,500
 C. $1,600
 D. $1,700
 E. $1,800
Ans: Option C

Explanation:

  1. SP = 2000 and SP = 1.25 × CP.
  2. Thus CP = SP ÷ 1.25 = 2000 ÷ 1.25 = 1600.
Q10. A man bought a watch for $2,000. After spending $200 on repair, he sold it for $2,640. Find his gain percent.
A. 10%
 B. 15%
 C. 20%
 D. 25%
 E. 30%
Ans: Option C

Explanation:

  1. Total cost price = purchase price + repair = 2000 + 200 = 2200.
  2. SP = 2640.
  3. Profit = SP - Total CP = 2640 - 2200 = 440.
  4. Profit% = (440 / 2200) × 100% = 20%.

The document Sample Previous Year Questions: Profit and Loss is a part of the GMAT Course Quantitative Reasoning for GMAT.
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FAQs on Sample Previous Year Questions: Profit and Loss

1. What is the formula for calculating profit and loss?
Ans. The formula for calculating profit is: Profit = Selling Price (SP) - Cost Price (CP). For loss, the formula is: Loss = Cost Price (CP) - Selling Price (SP).
2. How do you determine the percentage profit or loss?
Ans. Percentage profit is calculated using the formula: (Profit / Cost Price) × 100%. Percentage loss is calculated as: (Loss / Cost Price) × 100%.
3. What is the difference between gross profit and net profit?
Ans. Gross profit is the difference between sales revenue and the cost of goods sold (COGS), while net profit is what remains after all operating expenses, taxes, and interest have been deducted from gross profit.
4. How can discounts affect profit calculations?
Ans. Discounts reduce the selling price, which can affect profit calculations. If the discount is significant enough, it may lead to a loss if the selling price falls below the cost price.
5. What role does markup play in pricing strategies?
Ans. Markup refers to the amount added to the cost price of a product to determine its selling price. It is typically expressed as a percentage of the cost price and is crucial for ensuring that the business covers costs and generates profit.
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Apr 19, 2026 Last updated
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