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Introduction Cost Price (CP) Formula
The CP formula, also known as the Cost Price formula, is used to calculate the original or initial cost price of an item or product. It is commonly used in finance, accounting, and business contexts to determine the cost at which an item was purchased or produced.
CP Formula
The general formula for calculating the cost price (CP) is:
CP = SP – Profit
Where:
CP is the cost price.
SP is the selling price.
Profit is the amount of profit earned on the item.
The CP formula allows you to find the original cost of an item when you know the selling price and the profit made on it. By subtracting the profit from the selling price, you can determine the cost at which the item was initially acquired or produced.
Conclusion
The CP formula is particularly useful in calculating profit margins, determining break-even points, and analyzing the financial performance of a business. It helps in understanding the relationship between the selling price, profit, and cost incurred in the production or acquisition of goods or services.
It’s important to note that the CP formula assumes that there are no additional expenses or costs associated with the item other than the cost price itself. In practice, there may be other factors such as taxes, overheads, or transportation costs that can influence the overall cost of an item.
Overall, the CP formula provides a simple and straightforward way to calculate the cost price of an item based on the selling price and profit earned.
Solved Examples on CP Formula
Example 1: A product is sold for ₹ 200, and the profit earned on it is ₹50. Find the cost price of the product.
Solution:
Using the CP formula, we have:
CP = SP – Profit
CP = ₹200 – ₹50
CP = ₹150
Therefore, the cost price of the product is ₹150.
Example 2: A company sells a product for ₹1200, and it incurs a loss of ₹200 on the sale. Find the cost price of the product.
Solution:
Using the CP formula, we have:
CP = SP – Loss
CP = ₹1200 – (- ₹200) (Note: Loss is represented as a negative value)
CP = ₹1200 + ₹200
CP = ₹1400
Therefore, the cost price of the product is ₹1400.
Example 3: A retailer sells a watch for ₹80 and earns a profit of 25% on the sale. Find the cost price of the watch.
Solution:
First, calculate the profit amount:
Profit = (Profit Percentage/100) x CP
₹20 = (25/100) x CP
₹20 = 0.25 x CP
Now, rearrange the equation to solve for CP:
CP = ₹20 / 0.25
CP = ₹80
Therefore, the cost price of the watch is ₹80.
Frequently Asked Questions on Cost Price(CP) Formula
What is cost price value in valuation?
The cost price value in valuation is the original amount of money paid for an item or product when it was bought or produced.
What is the formula of cost price?
The formula for cost price (CP) is: Cost Price (CP) = Selling Price (SP) - Profit.
What is the simple definition of cost price?
The simple definition of cost price is the initial price paid to purchase or make a product or item.
How do you calculate the cost price?
You can calculate the cost price by subtracting the profit from the selling price. The formula is: Cost Price (CP) = Selling Price (SP) - Profit.
What is cost price and how do you calculate it?
Cost price is the original price of an item. To calculate it, subtract the profit from the selling price using the formula: Cost Price (CP) = Selling Price (SP) - Profit.
What is the formula for SP price?
The formula for Selling Price (SP) is: Selling Price (SP) = Cost Price (CP) + Profit.
What is cost price examples?
An example of cost price is when you buy a shirt for $20. That $20 is the cost price because it's what you paid to get the shirt.
How do you calculate cost price and sale price?
To calculate the cost price, subtract the profit from the selling price using the formula: Cost Price (CP) = Selling Price (SP) - Profit. To calculate the selling price, add the profit to the cost price using the formula: Selling Price (SP) = Cost Price (CP) + Profit.
