GMAT Word Problems on Profit & Loss
- July 19, 2020
- Posted by: CareerLabs Author
- Category: Free GMAT Preparation
Problems on profit and loss are very common in GMAT’s Quant Section. . If you have clarity in concepts regarding the cost price and selling price of a product, then with a few formulae you can solve these easily and quickly. GMAT does not ask straightforward questions so following are a few formulae and questions which will give you an idea about what to expect. The solutions should help you grasp as to how to attempt these questions.
Profit & Loss Formulae
Cost price (CP) is the price at which an article is purchased or produced.Selling price (SP) is the price at which an article is sold.
If SP > CP, it is a profit or gainIf CP > SP, it is a loss.
Gain or Profit = SP – CP
Loss = CP – SP
Loss or gain is always calculated on CP or by using the CP as the base.
Profit Percentage (Profit %):
Loss Percentage (Loss %)
In the case of a gain or profit,
- If the selling price of 25 goods is equal to the cost price of 20 goods, what is the % of loss or profit made?
Let the CP of 1 article be Rs.1.
Hence, CP of 20 goods = 20 * 1 = Rs. 20
SP of 25 goods = cost price of 20 goods = Rs.20.
Let us find the CP of 25 goods.
Cost price of 25 goods = 25 * 1 = Rs. 25.
Therefore, profit made on sale of 25 goods = Selling price of 25 goods – cost price of 25 goods = 20 – 25 = – Rs. 5.
Because the profit is the negative, it is a loss of Rs. 5.
Therefore, % loss = (Loss /CP )* 100
% loss = 5/25 * 100 = 20% loss.
- Sam purchases 10 apples for Rs. 1. At what price should he sell a dozen apples if he wants to make a total profit of 25%?.
The CP of 1 apple = 1/10 or Rs. 0.10.
As Sam wants to make a profit of 25%, his SP per apple should be 0.10 + 0.25* 0.10 = 0.1 + 0.025 = Rs. 0.125.
If the SP of 1 apple is Rs. 0.125, the SP of a dozen apples = 12 * 0.125 = Rs. 1.5
- What is the maximum percentage discount that a shopkeeper should offer on his quoted price so that he ends up selling at no profit or loss, if he had initially quoted his goods up by 50%?
Let the CP of the goods be Rs. 100.
He initially quoted his goods up by 50%.
Therefore, a 50% markup would have resulted in his quoted price being Rs.100 + 50% of Rs. 100 = Rs. 100 + Rs. 50 = Rs. 150.
He sells the product at no profit or loss.
Therefore, he sells the product at CP, which is RS. 100.
Hence, he offers a discount of Rs. 50 on her marked price of Rs 150.
Hence, the % discount offered by her = (Discount/ Marked Price) *100 = (50/150) *100= 33.33%
- A dealer who marked his commodity up by 50% subsequently offered a discount of 20% on the quoted price. What is the percentage profit the merchant made after offering the discount?
The easiest way is to assume a value for the merchant’s cost price.
Therefore, it is best to assume the cost price to be Rs. 100.
The merchant marks his commodity up by 50%.
Therefore, his marked price (quoted price) = cost price + mark up.
Marked price = Rs. 100 + 50% of Rs. 100 = 100 + 50 = Rs. 150.
The merchant gives a discount of 20% on his quoted price.
Discount offered = 20% of 150 = Rs. 30.
Therefore, he sold his commodity for Rs. 150 – Rs. 30 = Rs. 120.
We assumed his cost to be Rs. 100 and he sold it finally for Rs.120.
Hence, his profit = Rs. 20 on his cost of Rs. 100.
Hence, his % profit = profit/CP * 100 = (20/100) * 100 = 20%.
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