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# 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,**

**Sample Questions **

**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%.

We’ll be glad to help you in your GMAT preparation journey. You can ask for any assistance related to GMAT and MBA from us by calling us at **+91 6366004441**. You can also write to us at support@thecareerlabs.com

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