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Profit and Loss

List Price

List price is a very important concept in the domain of profit an loss. You may have recently visited a shop or bought an item from a shop. How did you find out the price? Either the shopkeeper tells you verbally or there is a price marked on the object. Every registered product has a price label, the one we call the maximum retail price or the mrp. This is the price that the manufacturer or the retailer wants for the product. Many times you will pay lesser than the marked price. This is the list price. Let us find out more and solve some examples of profit and loss in this section.

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List Price

The list price is also known as the Manufacturer’s Suggested Retail Price or the MSRP. It is also called the Recommended Retail Price (RRP) or The Suggested Retail Price (SRP) of any product that is available in the market. You must be aware of the MRP or the maximum retail price. The MRP is the maximum price at which a product can be sold. We design it in a way that the MRP must be the highest price that a person has to pay for a product.

List Price

Every human being wants to reach the height of ‘WIN-WIN’ situation throughout his life. To achieve it effectively, he allocates his time to work, to earn more wealth and fame. From stone age to present world, from material exchange to money transaction, for his produce and land, man has been applying the idea of ratio and proportion. The monumental buildings like the Taj Mahal and the Tanjore Brihadisvara Temple, known for their aesthetic looks, also demonstrate our ancestors’ knowledge and skill of using right kind of ratio to keep them strong and wonderful.

Many of the existing things in the world are connected by cause and effect relationship as in rain and harvest, nutrition and health, income and expenditure, etc. and hence compound variation arises. In our effort to survive and ambition to grow, we borrow or deposit money and compensate the process preferably by means of compound interest. The government bears the responsibility of the sectors like security, health, education and other amenities. To deliver these to all citizens, we pay various taxes from our income to the government.

In reality, the retailers are supposed to sell below the MRP and even the MSRP. The list price or the MSRP is set by the retailer or the shopkeeper, in reaction to the changes in the local markets. It is also known as the price list in India. The cost price can’t be greater than the MSRP and the MSRP can’t be greater than the MRP. A related concept is also the MAP or the Minimum Advertised Price. Let us see what this means before we move on to some solved problems ahead.

Browse more Topics under Profit And Loss

Minimum Advertised Price (MAP)

A minimum advertised price or MAP is the practice of a manufacturer providing marketing funds to a retailer contingent on the retailer advertising an end customer price at or above a specified level.

Before moving on to the solved examples, let us recall the concepts of Profit and Loss first.

Profit or Gain = Selling price – Cost price

Loss = Cost price – Selling price

Profit % = [Profit/C.P.] × 100

Loss % = [Loss/C.P.] × 100

Simple interest (I) = [(Principal × Rate × Time)/100] = Pnr/100

Amount = Principal + Interest

Let us move on to the solved examples now.

Solved Examples For You

We have List Price = Selling Price + Discount

Example 1: A dealer allows a discount of 10% and still gains 10%. What is the cost price of the book which is listed at Rs 220?

A) 150 Rs                   B)  160 Rs                       C)  170 Rs                    D) 180 Rs

Answer: We will use the following method to solve such type of questions:
List Price = Rs 220. Also, Discount = 10% of List Price or we can write = (10/100) × 220 = Rs 22. Thus we can write: S.P. = List Price – Discount = 220 – 22 = Rs 198.

Let C.P. be equal to Rs 100.
Gain = 10% of C. P. which can also be written as = (10/100) × 100 = Rs 10.

S.P. = C.P. + Gain = 100 + 10 = Rs 110. If S.P. is Rs 110, then C.P. is Rs. 100. When S.P. is Rs. 198,
and C.P. = (198×100)/110 = Rs. 180. Hence the correct option is D) Rs. 180.

Example 2: A trader buys an article for Rs 1,200 and lists it 30% above the C.P. He then sells it after allowing a discount of 20%. Find the S.P. and profit percent.

A) 2%                 B) 4%                   C) 6%                       D) 8%

Answer: Let the C.P. of the article be Rs 100. The List Price of the article = 30% above the C.P. which is = Rs 130. If C.P. is Rs. 100, then M.P. is Rs. 130. Also, when C.P. is Rs. 1200, List Price is = Rs. (1200×130)/100 or in other words = Rs. 1560.

Now Discount = 20% of 1560 = (20/100)×1560 = Rs. 312. Also we know that:

S.P. = M.P. – Discount which means we have = 1560 – 312 = Rs. 1248.

Now, Profit = S.P. – C.P. = 1248 –1200 = Rs 48.

Therefore, Profit % = (Profit/C.P.)×100 = (48/1200)×100 = 4%.

Hence the correct option here is B) 4%.

Practice Question

Q 1:  The listed price of an article is Rs 1200. A shopkeeper allows a discount of 20% and gets a profit of 20%. Find the cost price of the article?

A) 1600 Rs                 B) 1400 Rs                    C) 1800 Rs                   D)  800 Rs

Ans: S) Rs 800.

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