Price and Cost: Definition, Difference and Examples

The term“price” is the process of fixing the manufacturer’s value in exchanging services and goods. Cost is the cost of producing a product or providing a service that a company sells. Price and cost are the most used terms in revenue, i.e. sales business. In everyday conversation, we use them interchangeably.

Pricing depends on the company’s average prices and the buyer’s perceived value of an item compared to the perceived value. Each business starts with the motive and the intention of earning profits. This ambition can be obtained by the pricing method of the firm. This article will discuss all the different pricing, formulas, and examples.

Price vs. Cost

The primary difference between cost and price is that cost refers to the amount a business spends on materials, labour, sales, and other business activities. In contrast, price refers to the amount that a business charges its customers for providing goods and services to the customer. The customer must pay the agreed-upon amount to receive the goods or services.

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What is Cost?

Definition: The term cost defines the amount paid for anything or any of the expenses of doing something.

Example: The cost of a dozen apples which is the amount paid in the payment to purchase apples.

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What is Price?

Definition: Price is the money that someone can charge for goods or services and what is the customer willing to give up to receive the goods or the service.

Example: Any items you want to purchase have a price of a certain amount of money. Or any service or repair of any item also has a price for it.

Different types of prices are explained below:

Marked Price

You might have seen while purchasing goods that every article has a price marked on it. This is known as the market price (MP) of the article.

Selling Price

The price at which any item is sold is called its selling price. The abbreviation of the selling price is SP.

Cost Price

The amount paid to purchase or buy an object or the price at which an object is made is known as its cost price. The abbreviated is CP.

Note: Usually, the extra expenses like cartage taxes, labour charges etc., are included in the cost price. If overhead costs are not included in the cost price, then
Effective cost price \(=\) Payment made while purchasing the goods \(+\) Overhead expenses.

What is Discount

You might have seen while buying goods, there is a price marked. This price is known as the market price (MP). To clear the stocks or increase sales, sometimes shopkeepers offer a certain percentage of rebate on the marked price for cash payments. This rebate is known as a discount. The customer or buyer pays the difference between the market price and the discount.

Thus, \({\rm{S}}{\rm{.P}}{\rm{.}} = {\rm{Marked}}\,{\rm{price}} \,- {\rm{Discount}}\)
Also, \({\rm{Rate}}\,{\rm{of}}\,{\rm{Discount}} = {\rm{Discount}}\,\% = \frac{{{\rm{Discount}}}}{{{\rm{MP}}}} \times 100\% \)
Now, \({\rm{S}}{\rm{.P}}{\rm{.}} = {\rm{M}}{\rm{.P}}{\rm{.}} – {\rm{Discount}}\)
\( \Rightarrow {\rm{S}}{\rm{.P}}{\rm{.}} = {\rm{M}}{\rm{.P}}{\rm{.}} – \frac{{{\rm{Discount}}\,{\rm{\% }} \times {\rm{M}}{\rm{.P}}{\rm{.}}}}{{100}}\) (From (ii), \({\rm{Discount}} = \frac{{{\rm{M}}{\rm{.P}}{\rm{.}} \times {\rm{Discount}}\,{\rm{\% }}}}{{100}}\))
\( \Rightarrow {\rm{S}}{\rm{.P}}{\rm{.}} = {\rm{M}}{\rm{.P}}.\left( {1 – \frac{{{\rm{Discount}}\,\% }}{{100}}} \right)\)
\( \Rightarrow {\rm{S}}{\rm{.P}}{\rm{.}} = {\rm{M}}{\rm{.P}}.\left( {\frac{{{\rm{100 – Discount}}\,\% }}{{100}}} \right)\)
\( \Rightarrow {\rm{M}}{\rm{.P}}{\rm{.}} = \frac{{100 \times {\rm{S}}{\rm{.P}}{\rm{.}}}}{{100 – {\rm{Discount}}\,\% }}\)
Again,
\({\rm{S}}{\rm{.P}}{\rm{.}} = {\rm{M}}{\rm{.P}}.\left( {\frac{{100 – {\rm{Discount}}\,\% }}{{100}}} \right)\)
\( \Rightarrow {\rm{S}}{\rm{.P}}{\rm{.}} = {\rm{M}}{\rm{.P}}. – \frac{{{\rm{M}}{\rm{.P}}. \times {\rm{Discount}}\,\% }}{{100}}\)
\( \Rightarrow \frac{{{\rm{M}}{\rm{.P}}. \times {\rm{Discount}}\,\% }}{{100}} = {\rm{M}}{\rm{.P}}{\rm{.}} – {\rm{S}}{\rm{.P}}{\rm{.}}\)
\( \Rightarrow {\rm{Discount}}\,\% = \left( {\frac{{{\rm{M}}{\rm{.P}}{\rm{.}} – {\rm{S}}{\rm{.P}}{\rm{.}}}}{{{\rm{M}}{\rm{.P}}.}}} \right) \times 100\)

Remark 1: Electric goods, electronics and other things manufactured in a factory are marked according to the price list supplied by the factory, at which the retailer is supposed to sell them. This is known as the list price.

Remark 2: For books, the printed price is the marked price.
Note: It should be noted that a discount is given on the marked price only.

Price and Cost Difference

The difference between the price and the cost is given below:

Unit Price

The unit price is the price of one unit of a product or a service. This includes the fixed cost, the variable cost, overheads, direct labour cost, and profit margin to encourage the business activities and the organisation earnings. The formula for the unit price is given below:
\({\rm{Unit}}\,{\rm{Price}} = {\rm{Unit}}\,{\rm{Cost}} + {\rm{Profit}}\,{\rm{Margin}}\)
Example: The cost of \(3\) giant lollipops \( = {\rm{Rs}}.\,4.89\)
Then the cost of 1 giant lollipop is \( = \frac{{4.89}}{3} = {\rm{Rs}}.\,1.63\)

Formula

Profit: If the selling price of any item is greater than its cost price, the difference between the selling price and the cost price is called profit.
Thus, if \({\rm{SP}} > {\rm{CP,}}\) then
\({\rm{Profit}} = {\rm{S}}{\rm{.P}}{\rm{.}} – {\rm{C}}{\rm{.P}}{\rm{.}}\)
\( \Leftrightarrow {\rm{S}}{\rm{.P}}. = {\rm{C}}{\rm{.P}}. + {\rm{Profit}}\)
\( \Leftrightarrow {\rm{C}}{\rm{.P}}. = {\rm{S}}{\rm{.P}}. – {\rm{Profit}}\)

Profit Percentage: The profit percent is the profit that would be obtained for a \({\rm{C}}{\rm{.P}}.\) of \({\rm{Rs}}\,100,\) i.e.,
\({\rm{Profit}}\,{\rm{percent}} = \frac{{{\rm{Profit}}}}{{{\rm{CP}}{\rm{.}}}} \times 100\)
Thus, in case of profit or gain (i.e., if \({\rm{SP}} > {\rm{CP}}\)), we have
\({\rm{Profit}} = {\rm{S}}{\rm{.P}}{\rm{.}} – {\rm{C}}{\rm{.P}}{\rm{.}}\)
\({\rm{S}}{\rm{.P}}. = {\rm{Profit}} + {\rm{C}}{\rm{.P}}{\rm{.}}\)
\({\rm{C}}{\rm{.P}}{\rm{.}} = {\rm{S}}{\rm{.P}}{\rm{.}} – {\rm{Profit}}\)
\({\rm{Profit}}\,{\rm{percent}} = \frac{{{\rm{Profit}}}}{{{\rm{C}}{\rm{.P}}{\rm{.}}}} \times 100\)
\({\rm{Profit}} = \frac{{{\rm{C}}{\rm{.P}}{\rm{.}} \times {\rm{Profit}}\,{\rm{\% }}}}{{100}}\)
\({\rm{S}}{\rm{.P}}{\rm{.}} = {\rm{C}}{\rm{.P}}{\rm{.}} + {\rm{Profit}}\)
\( \Rightarrow {\rm{S}}{\rm{.P}}{\rm{.}} = {\rm{C}}{\rm{.P}}{\rm{.}} + \frac{{{\rm{Profit}}\,{\rm{\% }} \times {\rm{C}}{\rm{.P}}{\rm{.}}}}{{100}}\)
\( \Rightarrow {\rm{S}}{\rm{.P}}. = \left( {\frac{{100 + {\rm{Profit}}\,\% }}{{100}}} \right) \times {\rm{C}}{\rm{.P}}{\rm{.}}\)
\({\rm{C}}{\rm{.P}}{\rm{.}} = \frac{{100 \times {\rm{S}}{\rm{.P}}{\rm{.}}}}{{\left( {100 \times {\rm{Profit}}\,\% } \right)}}\)

Loss: If the selling price of any item is less than the cost price, the difference between the cost price and the selling price is called loss.
Thus, if \({\rm{SP}} < {\rm{CP}},\) then
\({\rm{Loss}} = {\rm{C}}{\rm{.P}}. – {\rm{S}}{\rm{.P}}{\rm{.}}\)
\( \Leftrightarrow {\rm{C}}{\rm{.P}}. = {\rm{S}}{\rm{.P}}{\rm{.}} + {\rm{Loss}}\)
\( \Leftrightarrow {\rm{S}}{\rm{.P}}{\rm{.}} = {\rm{C}}{\rm{.P}}{\rm{.}} – {\rm{Loss}}\)

Loss Percentage: The loss percent is the loss that would be made for a \({\rm{CP}}\) of \({\rm{Rs}}{\rm{.100}}{\rm{.}}\)
That is,
\({\rm{Loss}}\,{\rm{percent}} = \frac{{{\rm{Loss}}}}{{{\rm{C}}{\rm{.P}}{\rm{.}}}} \times 100\)
Thus, in case of loss (i.e., when \({\rm{SP}} < {\rm{CP}}\)). we have
\({\rm{Loss}} = {\rm{C}}{\rm{.P}} – {\rm{S}}{\rm{.P}}\)
\({\rm{S}}{\rm{.P}} = {\rm{C}}{\rm{.P}} – {\rm{Loss}}\)
\({\rm{C}}{\rm{.P}} = {\rm{S}}{\rm{.P}} + {\rm{Loss}}\)
\({\rm{Loss}}\,\% = \frac{{{\rm{Loss}}}}{{{\rm{C}}{\rm{.P}}}} \times 100\)
\({\rm{Loss}} = \frac{{{\rm{C}}{\rm{.P}} \times {\rm{Loss}}\,\% }}{{100}}\)
\({\rm{S}}{\rm{.P}} = {\rm{C}}{\rm{.P}} – {\rm{Loss}}\)
\( \Rightarrow {\rm{S}}{\rm{.P}} = {\rm{C}}{\rm{.P}} – \frac{{{\rm{C}}{\rm{.P}} \times {\rm{Loss}}\,{\rm{\% }}}}{{100}}\)
\( \Rightarrow {\rm{S}}{\rm{.P}}{\rm{.}} = \left( {\frac{{100 – {\rm{Loss}}\,\% }}{{100}}} \right) \times {\rm{C}}{\rm{.P}}{\rm{.}}\)
\({\rm{C}}{\rm{.P}}{\rm{.}} = \frac{{100 \times {\rm{S}}{\rm{.P}}{\rm{.}}}}{{\left( {100 – {\rm{Loss}}\,\% } \right)}}\)

Solved Examples

Q.1. Rishi bought a wristwatch for \({\rm{Rs}}\,2200\) and sold it for \({\rm{Rs}}\,1980.\) Find loss percent.
Ans: We have,
\({\rm{CP}}\) of watch \({\rm{ = Rs}}\,{\rm{2200}}\)
\({\rm{SP}}\) of watch \({\rm{ = Rs}}\,198{\rm{0}}\)
Since \({\rm{SP}} < {\rm{CP}}.\) So, there is loss given by
\({\rm{Loss}} = {\rm{C}}{\rm{.P}} – {\rm{S}}{\rm{.P}}\)
\( = {\rm{Rs}}\,2200 – {\rm{Rs}}\,1980 = {\rm{Rs}}\,220\)
Now, \({\rm{Loss}}\,\% = \left( {\frac{{{\rm{Loss}}}}{{{\rm{C}}{\rm{.P}}}} \times 100} \right)\% = \left( {\frac{{220}}{{2200}} \times 100} \right)\% = 10\% \)
Hence, \({\rm{Loss}} = {\rm{Rs}}\,220\) and \({\rm{Loss}}\,\% = 10\,\% \)

Q.2. If the cost price of \(18\) mangoes is the same as the selling price of \(16\) mangoes, find the gain per cent.
Ans: Let the cost price of each mango be \({\rm{Rs}}{\rm{.}}\,1.\) Then,
\({\rm{CP}}\) of \(18\) mangoes \({\rm{ = Rs}}\,{\rm{18}}\)
\({\rm{SP}}\) of \(16\) mangoes \({\rm{ = Rs}}\,{\rm{18}}\)
So, \({\rm{SP}}\) of \(18\) mangoes \( = {\rm{Rs}}\,18 \times \frac{{18}}{{16}} = {\rm{Rs}}\frac{{81}}{4}\)
\(\therefore \,{\rm{Gain}} = {\rm{S}}{\rm{.P}} – {\rm{C}}{\rm{.P}} = {\rm{Rs}}\left( {\frac{{81}}{4} – 18} \right) = {\rm{Rs}}\frac{9}{4}\)
Now, \({\rm{Gain}}\,\% = \left( {\frac{{{\rm{Gain}}}}{{{\rm{C}}{\rm{.P}}}} \times 100} \right)\% \)
\( \Rightarrow {\rm{Gain}}\,\% = \left( {\frac{{\frac{9}{4}}}{{18}} \times 100} \right)\% = 12.5\% \)
Hence, \({\rm{Gain}}\,\% = 12.5\% \)

Q.3. If the \({\rm{CP}}\) of \(25\) chairs is equal to the \({\rm{SP}}\) of \(30\) chairs, find the loss per cent.
Ans: Let the \({\rm{CP}}\) of each chair be\({\rm{Rs}}{\rm{.}}\,{\rm{1}}\). Then,
\({\rm{CP}}\) of 25 chairs \({\rm{ = Rs}}\,{\rm{25}}\)
And, \({\rm{CP}}\) of \(30\) chairs \({\rm{ = Rs}}\,{\rm{30}}\)
It is given that,
\({\rm{SP}}\) of \(30\) chairs \( = {\rm{CP}}\) of \(25\) chairs
\( \Rightarrow {\rm{SP}}\) of \(30\) chairs \({\rm{ = Rs}}\,{\rm{25}}\)
Clearly, \({\rm{SP}} < {\rm{CP}}.\) So, there is loss given by
\({\rm{Loss}} = {\rm{CP}} – {\rm{SP}} = {\rm{Rs}}\left( {30 – 25} \right) = {\rm{Rs}}\,5\)
Now, \({\rm{Loss}}\,\% = \left( {\frac{{{\rm{Loss}}}}{{{\rm{CP}}}} \times 100} \right)\% = \left( {\frac{5}{{30}} \times 100} \right)\% = 16\frac{2}{3}\% \)
Hence, \({\rm{Loss}}\,\% = 16\frac{2}{3}\% .\)

Q.4. Find \({\rm{SP}}\) if:
(i) \({\rm{M}}{\rm{.P}}{\rm{.}} = {\rm{Rs}}\,600\) and \({\rm{Discount}} = 10\% \)
(ii) \({\rm{M}}{\rm{.P}}{\rm{.}} = {\rm{Rs}}\,5450\) and \({\rm{Discount}} = 5\% \)
Ans: (i)We have,
\({\rm{M}}{\rm{.P}}{\rm{.}} = {\rm{Rs}}\,600\) and \({\rm{Discount}} = 10\% \)
\(\therefore \,{\rm{Discount}} = 10\,\% \) of \({\rm{Rs}}\,650 = {\rm{Rs}}\left( {\frac{{10}}{{100}} \times 650} \right) = {\rm{Rs}}\,65\)
Hence, \({\rm{S}}{\rm{.P}}. = {\rm{M}}{\rm{.P}}. – {\rm{Discount}} = {\rm{Rs}}\,650 – {\rm{Rs}}\,65 = {\rm{Rs}}\,585\)
Alternately, we have,
\({\rm{M}}{\rm{.P}}{\rm{.}} = {\rm{Rs}}\,650,\,{\rm{Discount}}\,\% = 10\)
\(\therefore {\rm{S}}{\rm{.P}}{\rm{.}} = {\rm{M}}{\rm{.P}}{\rm{.}} \times \frac{{\left( {100 – {\rm{Discount}}\,\% } \right)}}{{100}}\)
\( \Rightarrow {\rm{S}}{\rm{.P}}{\rm{.}} = {\rm{Rs}}\,\left\{ {650 \times \left( {\frac{{100 – 10}}{{100}}} \right)} \right\} = {\rm{Rs}}\,\left( {65 \times 9} \right) = {\rm{Rs}}\,585\)
(ii) We have \({\rm{M}}{\rm{.P}}{\rm{.}} = {\rm{Rs}}\,5450\) and \({\rm{Discount}} = 5\% \)
\(\therefore \,{\rm{Discount}} = 5\,\% \) of \({\rm{Rs}}\,5450 = {\rm{Rs}}\left( {\frac{{5}}{{100}} \times 5450} \right) = {\rm{Rs}}\,272.50\)
Hence, \({\rm{S}}{\rm{.P}}. = {\rm{M}}{\rm{.P}}. – {\rm{Discount}} = {\rm{Rs}}\,5450 – {\rm{Rs}}\,272.50 = {\rm{Rs}}\,5177.50\)
Alternately, we have,
\({\rm{M}}{\rm{.P}}{\rm{.}} = {\rm{Rs}}\,5450,\,{\rm{Discount}} = 5\% \)
\(\therefore {\rm{S}}{\rm{.P}}{\rm{.}} = {\rm{M}}{\rm{.P}}. \times \left( {\frac{{100 – {\rm{Discount}}}}{{100}}} \right)\)
\( \Rightarrow {\rm{S}}{\rm{.P}}{\rm{.}} = {\rm{Rs}}\left\{ {5450 \times \left( {\frac{{100 – 5}}{{100}}} \right)} \right\} = {\rm{Rs}}\,\left\{ {545 \times \frac{{95}}{{10}}} \right\} = {\rm{Rs}}\,5177.50.\)

Q.5. Find the \({\rm{M}}{\rm{.P}}{\rm{.}}\) if \({\rm{S}}{\rm{.P}}{\rm{.}} = {\rm{Rs}}\,3430\) and, \({\rm{Discount}} = 2\,\% \)
Ans: Let the \({\rm{M}}{\rm{.P}}{\rm{.}}\) be \({\rm{Rs}}\,100\)
We have, \({\rm{Discount}} = 2\% .\,\,2\% \) of \({\rm{Rs}}\,100 = {\rm{Rs}}\,2\)
\(\therefore {\rm{S}}{\rm{.P}}. = {\rm{M}}{\rm{.P}}. – {\rm{Discount}} = {\rm{Rs}}\,100 – {\rm{Rs}}\,2 = {\rm{Rs}}\,98\)
Now, when \({\rm{SP}}\) is \({\rm{Rs}}\,98,\,{\rm{M}}{\rm{.P}}. = {\rm{Rs}}\,100\)
When \({\rm{SP}}\) is \({\rm{Rs}}\,1,\,{\rm{M}}{\rm{.P}}{\rm{.}} = {\rm{Rs}}\frac{{100}}{{98}}\)
When \({\rm{SP}}\) is \(3430,\,{\rm{M}}{\rm{.P}}. = {\rm{Rs}}\left( {\frac{{100}}{{98}} \times 3430} \right) = {\rm{Rs}}\,3500.\)
Alternately, we have,
\({\rm{S}}{\rm{.P}}. = {\rm{Rs}}\,3430,\,{\rm{Discount}}\,\% = 2\)
\(\therefore {\rm{M}}{\rm{.P}}. = \frac{{100 \times {\rm{S}}{\rm{.P}}{\rm{.}}}}{{100 – {\rm{Discount}}\,\% }}\)
\( \Rightarrow {\rm{M}}{\rm{.P}}{\rm{.}} = {\rm{Rs}}\left\{ {\frac{{100 \times 3430}}{{100 – 2}}} \right\} = {\rm{Rs}}\,3500.\)

Q.6. \(200\,{\rm{kg}}\) of sugar was purchased at the rate of \({\rm{Rs}}\,15\) per \({\rm{kg}}\) and sold at a profit of \({\rm{5\% }}.\) Compute the profit and the selling price per \({\rm{kg}}.\)
Ans: We have,
\({\rm{CP}}\) of \(200\,{\rm{kg}}\) of sugar \( = {\rm{Rs}}\left( {200 \times 15} \right) = {\rm{Rs}}\,3000\)
\({\rm{Profit}}\,\% = 5\% \)
\(\therefore {\rm{Profit}} = 5\% \) of \({\rm{Rs}}\,3000\)
\( \Rightarrow \,{\rm{Profit}} = {\rm{Rs}}\,\left( {\frac{5}{{100}} \times 3000} \right)\)
\( \Rightarrow \,{\rm{Profit}} = {\rm{Rs}}\,150\)
Now, \({\rm{S}}{\rm{.P}}{\rm{.}} = {\rm{C}}{\rm{.P}}. + {\rm{Profit}}\)
\( \Rightarrow {\rm{S}}{\rm{.P}}{\rm{.}} = {\rm{Rs}}\left( {3000 + 150} \right) = {\rm{Rs}}\,3150\)
Hence \({\rm{S}}{\rm{.P}}{\rm{.}}\) per \({\rm{kg}} = {\rm{Rs}}\left( {\frac{{3150}}{{200}}} \right) = {\rm{Rs}}\,15.75\)
Alternately, we have,
\({\rm{C}}{\rm{.P}}{\rm{.}} = {\rm{Rs}}\,3000\) and \({\rm{Gain}} = 5\% \)
\(\therefore {\rm{S}}{\rm{.P}}{\rm{.}} = \left( {\frac{{100 + {\rm{Gain}}\,\% }}{{100}}} \right) \times {\rm{C}}{\rm{.P}}{\rm{.}}\)
\( \Rightarrow {\rm{S}}{\rm{.P}}. = {\rm{Rs}}\left( {\frac{{100 + 5}}{{100}}} \right) \times 3000 = {\rm{Rs}}\,3150\)
Hence, \({\rm{S}}{\rm{.P}}{\rm{.}}\) per \({\rm{kg}} = {\rm{Rs}}\left( {\frac{{3150}}{{200}}} \right) = {\rm{Rs}}\,15.75\)

FAQs

Q.1. What is the definition of unit price in math?
Ans: The unit price is the unit of a product or a service.
Example: If \(18\) units of the product cost \( = {\rm{Rs}}\,360\)
Then the price per unit is \( = {\rm{Rs}}\,\frac{{360}}{{18}} = {\rm{Rs}}\,20\)
So the unit price is \({\rm{Rs}}\,20.\)

Q.2. What are the formulas of the \({\rm{CP}}\) and the \({\rm{SP?}}\)
Ans: Few of the formulas for \({\rm{CP}}\) and \({\rm{SP}}\) are given below:
If \({\rm{SP}} > {\rm{CP}},\) then
\({\rm{Profit}} = {\rm{S}}{\rm{.P}}{\rm{.}} – {\rm{C}}{\rm{.P}}.\)
\( \Leftrightarrow {\rm{S}}{\rm{.P}}{\rm{.}} = {\rm{C}}{\rm{.P}}{\rm{.}} + {\rm{Profit}}\)
\( \Leftrightarrow {\rm{C}}{\rm{.P}}{\rm{.}} = {\rm{S}}{\rm{.P}}{\rm{.}} – {\rm{Profit}}\)
If \({\rm{SP}} < {\rm{CP}},\) then
\({\rm{Loss}} = {\rm{C}}{\rm{.P}}. – {\rm{S}}{\rm{.P}}{\rm{.}}\)
\( \Leftrightarrow {\rm{C}}{\rm{.P}}{\rm{.}} = {\rm{S}}{\rm{.P}}{\rm{.}} + {\rm{Loss}}\)
\( \Leftrightarrow {\rm{S}}{\rm{.P}}{\rm{.}} = {\rm{C}}{\rm{.P}}{\rm{.}} – {\rm{Loss}}\)

Q.3. What is the market price formula?
Ans: The formula for the market price is given below:
\({\rm{S}}{\rm{.P}}. = {\rm{Marked}}\,{\rm{price}}\, -\, {\rm{Discount}}\)
Also, \({\rm{Rate}}\,{\rm{of}}\,{\rm{discount}} = {\rm{Discount}}\,\% = \frac{{{\rm{Discount}}}}{{{\rm{MP}}}} \times 100\)
Now, \({\rm{S}}{\rm{.P}}{\rm{.}} = {\rm{M}}{\rm{.P}}. – {\rm{Discount}}\)

Q.4. How is the discount calculated?
Ans: When you want to calculate the discount, you have to multiply the rate by the original price. Next, when you want to calculate the sale price, you have to subtract the discount from the original price.

Q.5. How do you calculate profit from cost?
Ans: The formula to calculate the profit is:
\({\rm{Total}}\,{\rm{Revenue}}\, -\, {\rm{Total}}\,{\rm{Expenses}} = {\rm{Profit}}\)
Profit is determined by subtracting the direct and the indirect costs from all the sales earned. The direct costs can include the purchases like materials and staff wages.
\({\text{Profit}}\,{\text{percent}}\,{\text{=}}\,\frac{{{\text{Profit}}}}{{{\text{CP}}{\text{.}}}} \times 100\)
\({\rm{Profit}}\,{\rm{percent}} = \frac{{{\rm{Profit}}}}{{{\rm{CP}}}} \times 100\)
\({\rm{Profit}} = \frac{{{\rm{C}}{\rm{.P}}{\rm{.}} \times {\rm{Profit}}\,\% }}{{100}}\)

Solve Important Profit and Loss Questions

We hope this detailed article on the concept of price helped you in your studies. If you have any doubts, queries or suggestions regarding this article, feel to ask us in the comment section and we will be more than happy to assist you. Happy learning!