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Profit Formula

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  • Last Updated : 28 Apr, 2022

Profit is defined as the amount obtained by selling a product that is greater than the cost price of the product. It is the amount gained from any type of commercial activity. In summary, if the selling price (SP) of a product is greater than the cost price (CP), it is deemed a gain or profit. It explains the financial gain achieved when the revenue from a commercial activity surpasses the taxes, costs, and so on that are involved in the maintenance of a firm.

Profit Formula

Profit is better described in terms of cost price and selling price. The cost price of a product or commodity is its real price, whereas the selling price is the amount at which the object is sold. So, if the selling price of the product exceeds the cost price, the firm has made a profit. 

As a result, the profit calculation formula is as follows,

Profit or Gain = Selling Price (S.P)  – Cost Price (C.P)

Another case: When a product is sold for less than its cost price, it is referred to as a loss.

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

Profit Percentage 

Profit percentage (%) is the amount of profit represented as a percentage of the total. Because this profit is dependent on the cost price. The formula for calculating the profit % is,

(Profit / Cost price ) × 100

Sample Questions

Question 1: A shopkeeper buys pens in bulk for Rs. 20 each. He sells each of them for Rs. 45 each. What will be the profit and the profit percentage?

Solution: 

Given: Selling price of the Pen (S.P) = Rs. 45

Cost price of the Pen (C.P) = Rs. 20

Now, As per the profit formula,

Profit = Selling Price – Cost Price

So, profit = 45 – 20 

Profit = Rs. 25

Now, Using the formula for profit percentage,

Profit % = (Profit / Cost Price ) × 100

So, the profit percentage = (25 / 20) × 100 

= 1.25 × 100 

Profit percentage = 125%.

Question 2:  If a shopkeeper sells fruits at Rs.250 per kg, whose cost price is Rs.150/- per kg. What will be the profit gained by the shopkeeper?

Solution: 

Given Cost Price = Rs.150/-

And Selling Price = Rs.250/-

From the formula of profit, we know,

Profit = Selling Price – Cost Price

Profit = 250 – 150

Profit = 100

Therefore, the shopkeeper earn profit Rs. 100/- .

Question 3:  Find the gain percentage if the profit is Rs 100 and the cost price is Rs 150?

Solution: 

As we know, 

The profit percentage formula is 

Profit percentage % = (Profit / Cost Price ) × 100

Since, Profit  = Rs 100 and Cost Price = Rs 150

Therefore, Profit % = (100/150) × 100

Profit % = 10000/150

= 66.66

Hence, the gain percentage is 66.66%.

Question 4: Sanju sold a digital watch for Rs. 6,000, on which he gains 25%. What is the cost price of the digital watch?

Solution: 

For the digital watch Gain = 25%.

Let cost price of watch (C.P.) = Rs.100.

Therefore, selling price (S.P.) of digital watch = (100 + 25) = 125

When selling price (S.P.) is Rs.125, cost price (C.P.) is Rs.100.

Therefore, when selling price (S.P.) is Rs.6000,

Cost price (C.P.) = {100 / (100 + gain )} × 6000

= 100/125 × 6000 

= (100 × 6000)/125

= 600000/125 

= 4800

Therefore, cost price (C.P.) of the digital watch = Rs. 4800.

Question 5: A cost price for the bag is Rs. 350 and the selling price is Rs. 400. Find the profit percentage he earned.

Solution: 

Cost price = Rs 350 

Selling price = Rs 400

Profit = SP – CP

= 400 – 350 

= 50.

Gain% = (Profit / Cost price ) x 100

= (50/350) × 100

= 14.28 %

Question 6: What will be the selling price if the profit is Rs 100 and the cost price is Rs 350?

Solution: 

Let selling price = x 

Given cost price = Rs 350

And profit = Rs 100

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

100 = x  – 350

or x = 100 + 350

x = 450

So the selling price is Rs 450.

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