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9 Profit and Loss
Key Concepts
• Cost Price and Selling Price • Profit and Loss per cent
• Overhead Expenses • Marked Price and Discount
• Profit and Loss
You must have observed that whenever we buy any product from a shop, we pay some money to the
shopkeeper. But do you know the shopkeeper buys the same product at a relatively low price than
what is paid by us. However, sometimes the shopkeeper may also lose some money in the transaction.
Let’s understand the concept of profit and loss in this chapter.
In this chapter, we will learn about cost price, selling price, overhead expenses, profit, loss and related
terms. We will also learn about marked price and discount.
Cost Price and Selling Price
The price at which an article is bought is known as the cost price. We write C.P. as the short form of
cost price. For example, if you buy a notebook for ` 45, then ` 45 is C.P. for you.
The price at which an article is sold is known as the selling price. We write S.P. as the short form of
selling price. For example, if you sell the notebook you bought for ` 45 to your friend for ` 55, then
` 55 is S.P. for you. Also, in this case ` 55 is C.P. for your friend.
Overhead Expenses
The additional expenses such as transport, repair and maintenance that a shopkeeper or dealer has to
incur before selling the goods are known as overhead expenses or overhead charges. The overhead
expenses are taken into account while calculating the cost price of an article.
\ Cost price = Amount paid to purchase the article + Overhead expenses
Profit and Loss
When S.P. of an article is more than its C.P., then the article is sold
at a profit. Maths Info
Also, Profit = S.P. – C.P. All profit and loss calculations
When S.P. of an article is less than its C.P., then the article is sold at are done on the cost price.
a loss.
Also, Loss = C.P. – S.P.
Example 1: Find the profit or loss made on an article if:
(a) C.P. = ` 156, S.P. = ` 165
(b) Price = ` 250, Transportation = ` 50, S.P. = ` 200
Solution: (a) As C.P. < S.P., therefore there is a profit.
Profit = S.P. – C.P. = ` 165 – ` 156 = ` 9
100