Accounting Profit Equation
Accounting is one of the important terms. Its generally used in business .The profit is define as that the positive difference from the marginal cost to the variable cost. The total profit equation is utilized to find the profit percentage of the business. The profit equation is,
Profit percentage= `((SELLING PRICE -COST PRICE) /(COST PRICE) )` `xx` 100
In the competitive exams almost have the questions based on this total profit equation. Here we are going to study about accounting profit equation.Example Problems of Accounting Profit Equation:
Euclid's Division Algorithm
Ashleigh buys a table for Rs. 4200 and expends Rs. 800 on its repairs. If she sold the table for Rs. 6000, her gain percent is?
Step 1: Cost Price (C.P.) = Rs. (4200 + 800) = Rs. 5000.
Step 2: Selling Price (S.P.) = Rs. 6000.
Step 3: Gain = (S.P.) - (C.P.) = Rs.(6000 - 5000) = Rs. 1000.
Step 4: Profit %= (`(1000/5000)` `xx` 100 ) = 20 %
2. The cost of 20 pens is the same as the selling price of x pencils. If the profit is 25%, then find the value of x?
Step 1: Let C.P. of each pens be Re. 1 C.P. of x pencils = Rs. x.
Step 2: S.P. of x pencills= Rs. 20.
Step 3: Profit = Rs. (20 - x).
Step 4: Therefore `(20-x) /(x) ` `xx` 100 = 25
Step 5: Now we need to find the value of x .
Step 6: So, 2000 - 100x = 25x. So, 125x = 2000.Therefore, the value of x =16.
These are the example problems of accounting profit equationSome more Examples of Accounting Profit Equation :
Example 3 :
If selling price increased double means, the profit achieved as triples. Find the profit percentage?
Step 1: Let C.P. be Rs. X and S.P. be Rs. y.
Step 2: Then, 3(y - X) = (2y - X) y = 2x.
Step 3: Profit = Rs. (y - X) = Rs. (2x - X) = Rs. x.
Step 4: Therefore profit% = (`x/X` ) `xx` 100 = 100 %
The profit is 300% of the cost. If the cost increased by 25% but the selling price is same, in what percentage of the selling price is the profit?
Step 1: Let C.P.= Rs. 100. Then, Profit = Rs. 300, S.P. = Rs. 400.
Step 2: New C.P. = 125% of Rs. 100 = Rs. 125
Step 3: New S.P. = Rs. 400.
Step 4: Profit = Rs. (400 - 125) = Rs. 275.
Step 5: Required percentage= (`(275/400) ` `xx` 100) = 68.75 %
These are the examples of accounting profit equation.