Profit & Loss For CAT Exam ,Benefit and Misfortune has continuously been one of the foremost vital parts of CAT. A part of questions from this chapter are moreover utilized in other Administration entrance exams, such as the SNAP, CMAT, Tangle, ATMA, etc.
We’ll begin by looking at what Benefit & Misfortune implies for a single exchange. In these sorts of bargains, certain thoughts are critical. What they are:
The fetched cost (CP) of a item for a individual is the cost at which they purchase it.
The cost at which a individual offers a item is the Offering cost of the product(SP).
On the off chance that the Offering cost of the item is more than the cost cost at that point, there’s a pick up or benefit within the exchange.
Benefit or Pick up = SP – CP , (SP > CP)
In case the Offering cost of the item is less than the Taken a toll cost at that point , there’s a misfortune within the exchange.
How To Find Percentage of Profit & Loss
Percentage profit or Loss is calculated with regard to Fetched Price(CP)
You can calculate profit per cent by Profit % = 100 × Profit/Cost Price.
Similarly, the loss per cent can be calculated by using Loss % = 100 × Loss/Cost Price.
SP= (1 + Profit%) CP
SP= (1 – Loss%) CP
CP=(1 – Profit%) SP
CP=(1 + Loss%) SP
Type of Cost
Settled Costs (FC): Settled costs are costs that stay consistent in any case of the level of generation or action. For CAT exam planning, settled costs might incorporate costs like consider fabric, coaching expenses, and online course memberships.
Variable Costs (VC): Variable costs alter in extent to the level of generation or movement. Within the setting of CAT exam planning, variable costs seem incorporate costs like deride test expenses, extra think about assets, and transportation costs in the event that going to physical classes.
Opportunity Costs: Opportunity taken a toll alludes to the esteem of the following best elective inevitable when a decision is made. Within the case of CAT arrangement, the time and exertion went through on examining seem have been utilized for other exercises, like working or seeking after other instructive openings. The potential picks up from these elective exercises speak to opportunity costs.
Coordinate Costs: These are costs that can be straightforwardly credited to a particular action or venture. For CAT planning, coordinate costs might incorporate costs like think about materials, coaching expenses, and online course memberships.
Circuitous Costs: Roundabout costs are costs that are not specifically tied to a particular action but still contribute to the in general taken a toll structure. Circuitous costs for CAT arrangement might incorporate costs like lease, utilities, and transportation in case they are not straightforwardly related to the consider prepare.
Sunk Costs: Sunk costs are costs that have as of now been caused and cannot be recouped, in any case of future choices. For CAT arrangement, in case you’ve as of now went through cash on consider materials or coaching but choose to alter your approach, those starting costs are considered sunk costs.
Negligible Costs: Negligible taken a toll is the extra fetched caused by creating one more unit or locks in in one more movement. In terms of CAT planning, the negligible taken a toll may be the taken a toll of taking an additional taunt test or purchasing an extra consider asset.
Normal Costs: Normal costs are obtained by separating the entire taken a toll by the amount of units created or exercises embraced. Within the setting of CAT planning, the normal taken a toll might assist you analyze how much you’re investing on normal for each consider session or taunt test.
Unequivocal Costs: Unequivocal costs are the genuine out-of-pocket costs brought about for a particular movement. For CAT preparation, express costs incorporate things like coaching expenses, ponder materials, and application expenses.
Understood Costs: Understood costs speak to the opportunity fetched of utilizing assets simply as of now claim, instead of offering or utilizing them for another reason. For CAT planning, this seem incorporate utilizing your possess computer for considering rather than leasing or acquiring a unused one.
The concept of Margin or contribution Per unit
The equation for calculating Edge or Commitment Per Unit is:
Edge Per Unit = Offering Cost Per Unit – Variable Fetched Per Unit
Offering Cost Per Unit: The cost at which each unit of the item is sold.
Variable Taken a toll Per Unit: The taken a toll that shifts with the level of generation or deals, such as coordinate fabric costs, coordinate labor costs, and other variable costs.
The concept of the Break-even Point
The break-even point in Profit & Loss could be a crucial concept in taken a toll bookkeeping and money related investigation that makes a difference businesses get it at what level of deals or action they will not one or the other make a benefit nor cause a misfortune. In other words, it’s the point where add up to income rises to add up to costs, coming about in zero benefit.
At the break-even point, a trade has secured all its costs—both settled and variable—with its deals income. Any deals past the break-even point contribute specifically to benefit.
To calculate the break-even point, you would like to consider two fundamental sorts of costs:
Fixed Costs (FC): These are costs that stay steady in any case of the level of generation or deals. Cases incorporate lease, compensations, utilities, and gear devaluation.
Variable Costs (VC): Variable costs alter in extent to the level of generation or deals. These incorporate costs such as crude materials, coordinate labor, and bundling materials.
The equation to calculate the break-even point in units is:
Break-Even Point (in units) = Settled Costs / (Offering Cost per Unit – Variable Fetched per Unit)
Settled Costs: Add up to settled costs for the period beneath thought.
Offering Cost per Unit: The cost at which each unit is sold.
Variable Fetched per Unit: The fetched related with creating each unit.
Then again, you’ll be able calculate the break-even point in deals income utilizing the taking after equation:
Break-Even Point (in deals income) = Settled Costs / Commitment Edge Proportion
Commitment Edge Proportion = (Offering Cost per Unit – Variable Taken a toll per Unit) / Offering Cost per Unit
The commitment edge proportion speaks to the parcel of each deals dollar that contributes to covering settled costs and creating benefit.
Concept of Mark up
Whereas offering merchandise and administrations businessman increments the CP by a few rate called markup rate and the comparing cost is called checked cost and the sum with which the CP is expanded is called Markup cost.
CP + Markup = Marked price
CP + Markup% on CP = Marked Price(MP)
If a trader provides discount after marking up the price over and above CP then:-
MP(1 – Discount%) = Selling Price.
Re-writing in terms of Cost price(CP)
Given: Cost Price (CP) = Rs. 800
Loss Percentage = 10%
Formula for Loss = (Loss Percentage / 100) * CP
Loss = (10/100) * 800 = Rs. 80
Selling Price (SP) = CP – Loss = 800 – 80 = Rs. 720.
Given: CP = Rs. 600
Profit Percentage = 25%
Formula for Profit = (Profit Percentage / 100) * CP
Profit = (25/100) * 600 = Rs. 150
Selling Price (SP) = CP + Profit = 600 + 150 = Rs. 750.
Given: CP = Rs. 1000
Markup Percentage = 20%
Discount Percentage = 10%
Markup Amount = (Markup Percentage / 100) * CP = (20/100) * 1000 = Rs. 200
Marked Price (MP) = CP + Markup Amount = 1000 + 200 = Rs. 1200
Discount Amount = (Discount Percentage / 100) * MP = (10/100) * 1200 = Rs. 120
Selling Price (SP) = MP – Discount Amount = 1200 – 120 = Rs. 1080.
Let’s assume the CP = 100. Given: Loss Percentage = 8%
Selling Price (SP) = CP + 10% of CP = CP + 0.10 * CP = 1.10 * CP
Loss = CP – SP = CP – (1.10 * CP) = -0.10 * CP
Loss Percentage = (Loss / CP) * 100 = (-0.10 * CP / CP) * 100 = -10%
This means the trader bought the article for 10% less than its cost price.
Given: Discount Amount = Rs. 100
Discount Percentage = 25%
Let MP be the marked price.
Discount Amount = (Discount Percentage / 100) * MP
100 = (25/100) * MP
MP = 100 * (100/25) = Rs. 400
Now, Selling Price (SP) = MP – Discount Amount = 400 – 100 = Rs. 300
SP = CP, because no profit or loss is mentioned.
So, CP = Rs. 300.