Profit in Maths is considered as the gain amount from any business activity. Whenever a shopkeeper sells a product, his motive is to gain some benefit from the buyer in the name of profit. Basically, when he sells the product more than its cost price, then he gets the profit on it but if he has to sell it for less than its cost price, then he has to suffer the loss. The concept of profit and loss is basically defined in terms of business. Any financial benefit gained in business goes to the owner of the business. Let us learn in this article how to calculate the profit amount and percentage with the help of formulas and related topics.
Profit is explained better in terms of cost price and selling price. Cost price is the actual price of the product or commodity and selling price is the amount at which the product is sold. So, if the selling price of the commodity is more than the cost price, then the business has gained its profit. Therefore formula to calculate the profit is;
Profit or Gain = Selling Price – Cost Price
But, when the product is sold at selling price lesser than the cost price, it is termed as loss. Therefore,
Loss = Cost Price – Selling Price
Once the profit is calculated we can also derive the percentage profit e have gained in any business by the formula given here;
P% = (P/CP) × 100
Where P is the profit and CP is the cost price.
What is Gross Profit?
Gross profit is the amount gained by any business or company after removing the cost associated with the making and selling of the product from the selling price. The revenue yielded in the company’s income after sales of the commodity should be reduced by the amount or cost it took to make the product or provide any service to the customer’s, to get the gross percentage of the profit.
Problem 1: If a shopkeeper sells Apple at Rs.200 per kg, whose cost price is Rs.150/- per kg. Then find the profit gained by the shopkeeper.
Solution: Given Cost Price = Rs.150/-
And Selling Price = Rs.200/-
From the formula of profit, we know,
Profit = Selling Price – Cost Price
P = 200 – 150
P = 50
Therefore, the shopkeeper gains Rs.50/- from the business.
Problem 2: Find the gain percentage for the above example.
Solution: By the profit percentage formula, we know,
P% = (P/CP) × 100
Since, P = 50 and CP = 150
P% = (50/150) × 100
P% = 100/3