Profit and loss with overhead expenses
A shopkeeper buys a scooty from a wholesaler.
He buys a scooty for
$40,000$
rupees.
Now, he spends
$4,000$
rupees on its transportation.
And then, he spends
$1,000$
rupees for its maintenance.
Additional charges paid by the shopkeeper other than the cost price are known as overhead expenses.
Letâ€™s understand more about overhead expenses.
First, letâ€™s recall the terms :Cost price, Selling price, Profit and Loss.
Cost price is the original price of the item.
Selling price is the price at which the product is sold.
If the selling price of a product is more than the cost price, then profit is calculated as above.
And profit percent can be found as given.
If the cost price of a product is more than the selling price, loss is calculated as above.
Loss percent can be calculated as given.
Now, letâ€™s understand overhead expenses.
Overhead expenses are expenses or charges other than the original price of an item.
Some of the overhead expenses are as above.
Letâ€™s solve the same problem discussed above.
Suppose, the shopkeeper further sells the scooty to Ram for rupees
$40,000$
.
The Total cost price of the scooty is equal to the sum of cost price of scooty and overhead expenses.
He sells the scooty for
$40,000$
rupees. So, the selling price of the scooty will be as given.
Since, the total cost price of the scooty is more than the selling price of the scooty. So, he faces loss of
$5000$
rupees.
So, the loss percent is
$11.11%$
So the shopkeeper gets a loss of
$5,000$
rupees and the loss percent is
$11.11%$
.
Letâ€™s solve another problem.
Ram buys a camera for rupees
$8000$
.
He spends
$600$
rupees on transportation.
Then, he sells the camera for
$10,500$
rupees.
Letâ€™s see how to find profit/loss for the camera.
Ram bought the camera for
$8000$
rupees. So, the cost price(CP) of the camera is
$8000$
rupees.
As he spent
$600$
on transportation. So, the overhead expenses are
$600$
rupees.
So, the total cost of the camera can be calculated by adding cost price and overhead expenses.
And he sells the camera for rupees
$10,500$
. So, the selling price of the camera will be
$10,500$
rupees.
Since, the selling price is more than the total cost price. So Ram gets profit of
$1900$
rupees.
So, the profit percent is
$22.09%$
.
Therefore, Ram gets the profit percent of
$22.09$
.
Revision
Cost price is the original price of the item and the selling price is the price at which the product is sold.
Overhead expenses are expenses or charges other than the original price of an item.
Some of the overhead expenses are as above.
The End