Profit and Loss formula is used in mathematics to determine the price of a commodity in the market and understand how profitable a business is. Every product has a cost price and a selling price. Based on the values of these prices, we can calculate the profit gained or the loss incurred for a particular product. The important terms covered here are cost price, fixed, variable and semi-variable cost, selling price, marked price, list price, margin, etc. Also, we will learn the profit and loss percentage formula here.
For example, for a shopkeeper, if the value of the selling price is more than the cost price of a commodity, then it is a profit and if the cost price is more than the selling price, it becomes a loss. Profit and Loss Basic Concepts Let us learn profit and loss concepts in maths. It is well explained in terms of cost price and selling price.
The amount gained by selling a product for more than its cost price.
The amount the seller incurs after selling the product less than its cost price is mentioned as a loss.
Cost Price (CP)
The amount paid for a product or commodity to purchase is called a cost price. Also, denoted as CP. This cost price is further classified into two different categories:
Fixed Cost: The fixed cost is constant, it doesn’t vary under any circumstances
Variable Cost: It could vary depending on the number of units and other factors
Selling Price (SP)
The amount for which the product is sold is called the Selling Price. It is usually denoted as SP. Also, sometimes called a sale price.
Marked Price Formula (MP)
This is basically labelled by shopkeepers to offer a discount to the customers in such a way that,
Discount = Marked Price – Selling Price
And Discount Percentage = (Discount/Marked price) x 100"