Cost price is the price at which an article is bought. All the expenditures that are made over the actual cost are included in the cost price of that article. Profit and loss measurement is generally done in terms of cost price. When articles are traded, the cost at which they are vended is known as the selling price of that article. In maths we may face different types of problems based on evaluating profits and losses using the cost price and selling price of the articles. Let us consider an example of such problems to understand them better:
Example: If selling price 55 and cost price 50 than how much profit in rupees and Percentage?
Solution: According to the question we have been given the cost price equals to 50 and the selling or vending price of article as 55. The profit seems to occur when vending price is more as compared to the cost or actual price of the article and loss prevails in the conditions where the selling price is less as compared to actual (market) price of the article.
Here in our example we are actually gaining profit in selling the good.
Formula for evaluating the profit is given as follows:
Profit (Rupees) = Vending Price – Market Price (Cost Price),
Profit (Percentage) = ((Vending Price – Market Price (Cost Price)) / Cost Price) * 100,
Here, Vending Price = 55 and Cost Price = 50,
Substituting the values of both in the above formula we get:
Profit (Rupees) = 55 – 50 = Rs. 5
Evaluating the equivalent percentage profit:
Profit (%) = 5 / 50 * 100,
Or Profit (%) = 100 / 10 = 10 %,
So, amount of profit earned by the person is 10 % or Rs. 5.