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May 12, 2012

Profit, Loss and Discount shortcut techniques - Lesson 1

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If you buy a mobile for Rs 1000, then it is called Cost Price. If you sell that to me for Rs 2500 (don't worry, I am dumb enough to buy that) then it is called the Selling Price. Here you made a "PROFIT" or "GAIN" of Rs 1500. If i sell the same mobile for Rs. 1800 to anybody else, then I will make a "LOSS" of Rs. 700.

Simply we can say that, if the Selling Price is is more than the Cost Price we can Make Profit. or If the Cost Price is more than the Selling Price then we will end up with Loss.

Profit = Selling Price (S.P) - Cost Price (C.P)



Percentage of Profit / Loss is calculated on the cost price by the following formula

Profit Percent = (Profit / Cost Price) X 100


Similarly,

Loss = Cost Price (C.P) - Selling Price (S.P)


Loss Per Cent = (Loss / Cost Price) X 100

Some Important Points to Remember :
  • Profit Or Loss Per Cent is always calculated on C.P and not in S.P
  • Overhead  expenses like Packaging, Transportation etc. are always added to the cost price to get the total C.P. and then profit per cent or loss per cent is calculated on this total cost price.
  • When the C.P and the S.P are given for different number of articles, first of all find C.P and S.P of equal number of articles and then only calculate profit per cent or loss per cent.

Marked Price and Discount :

When we go to a shop, we find price tags attached to the goods. The original price written on the price tag is called the "Marked Price". Sometimes, a reduction or concession is given on some Goods. We call this reduction as "Discount" . In Business, Discount is to attract the customers. More the sale, More the Profit :) Discount is given directly in terms of Money or in terms of other attractive articles. Direct discount is given on the labelled price. Which is much more than the actual cost price the seller has to pay. It is calculated in percentage. Seller gets profit even after giving discount to you. 
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