3.7 MONEY – PROFIT AND LOSS
Introduction
Money is a commodity accepted by general consent as a medium of economic exchange. It is the medium in which prices and values are expressed. Money circulates from person to person and country to country, thus facilitating trade, and it is the principal measure of wealth.
3.7.1 Profit and Loss
Cost Price (C.P): The price at which a business person buys an item.
Selling Price (S.P): The price at which a business person sells an item.
Profit
If the selling price is greater than the cost price, the business makes a profit.
Profit = S.P − C.P
Loss
If the selling price is lower than the cost price, the business makes a loss.
Loss = C.P − S.P
Percentage Profit and Loss
To compare profits or losses, we express them as percentages.
Percentage Profit = Profit Cost Price × 100%
Percentage Loss = Loss Cost Price × 100%
Worked Examples
Example 3.38
A trader bought an item at Ksh. 540 and sold it at Ksh. 800.
Solution
Profit = 800 − 540 = Ksh. 260
Example 3.39
John bought iron sheets for Ksh. 100,000. He spent Ksh. 22,000 on transport. After selling them, he got Ksh. 152,500. Calculate his percentage profit.
Solution
Buying price = Ksh. 100,000
Transport = Ksh. 22,000
Total Cost = Ksh. 122,000
Selling price = Ksh. 152,500
Profit = 30,500
Percentage Profit = 30,500 122,000 × 100% = 25%
Example 3.40
The cost price of an article is Ksh. 16,000. If a shopkeeper makes a loss of 4%, find the selling price.
Solution
Cost price = Ksh. 16,000
Loss = 4%
Loss = 4 100 × 16,000 = Ksh. 640
Selling price = 16,000 − 640 = Ksh. 15,360
Example 3.41
A shopkeeper makes 10% profit by selling a product for Ksh. 550. Find the cost price.Solution
Selling price = Ksh. 550
Profit = 10%
Cost price = 550 × 100 110 = Ksh. 500
Example 3.42
A shopkeeper makes 8% loss by selling a product for Ksh. 7,360. Find the cost price.
Solution
Selling price = Ksh. 7,360
Loss = 8%
Cost price = 7,360 × 100 92 = Ksh. 8,000
Exercise 3.7 – Profit and Loss
1. Find the percentage profit or percentage loss in each case.
(a) The cost price of an item is Ksh. 780 and the selling price is Ksh. 897.
Answer (%) =
Percentage Profit = (117 ÷ 780) × 100 = 15%
(b) The cost price is Ksh. 600 and the selling price is Ksh. 570.
Answer (%) =
Percentage Loss = (30 ÷ 600) × 100 = 5%
(c) The cost price is Ksh. 120 and the selling price is Ksh. 108.
Answer (%) =
Percentage Loss = (12 ÷ 120) × 100 = 10%
(d) The cost price is Ksh. 1,020 and the selling price is Ksh. 1,275.
Answer (%) =
Percentage Profit = (255 ÷ 1020) × 100 = 25%
2. A bed sheet was sold for Ksh. 483 at a profit of 15%. Find the cost price.
Answer (Ksh.) =
Selling price = 115%
483 = 115%
Cost price = (483 × 100) ÷ 115 = 420
3. A bicycle was bought for Ksh. 3,900. Ksh. 200 was spent on transport and Ksh. 900 on repair. It was sold at a loss of 10%. Find the selling price.
Answer (Ksh.) =
Loss = 10% of 5000 = 500
Selling Price = 5000 − 500 = 4500
4. An article is sold at a profit of 20%. If the cost price is Ksh. 2,000, find the selling price.
Answer (Ksh.) =
Selling Price = 2000 + 400 = 2400
5. An item was sold at a loss of 12%. If the cost price was Ksh. 5,000, find the selling price.
Answer (Ksh.) =
Selling Price = 5000 − 600 = 4400
6. A trader makes 25% profit by selling an item for Ksh. 1,250. Find the cost price.
Answer (Ksh.) =
Selling price = 125%
1250 = 125%
Cost price = (1250 × 100) ÷ 125 = 1000