Cost Price Formula

About Cost Price Formula

The cost price formula, abbreviated as CP, is used to compute an item's actual price. To put it another way, it is the price we pay for any commodity. Through the selling price, the cost price aids in determining profitability. This means you make a profit if the original value is less than the selling price, and you lose money if the original value is larger than the selling price.

Definition of Cost Price

The cost price is the amount of money spent to produce goods or services before any profit is made for the manufacturer or provider. Actual cost, latest cost, and average cost are all terms used to describe it. Production, property costs, materials, power, research & development, testing, worker wages, and anything else that must be paid for are all included in the cost price. The cost price and the selling price of any item are always used to compute profit and loss.

What is the Cost Price Formula?

The cost price is the amount we spend to purchase a commodity, and it is calculated using two simple formulas:

CP =SP –Profit

CP = SP + Loss

We utilise the following formula if we make a profit when selling a product.

Selling Price - Profit = Cost Price Formula

We utilise the following calculation if we lose money when selling a product.

Selling Price + Loss Equals = Cost Price Formula

Cost price formula = {100/(100 + Profit percent)} × SP is the formula that uses gain (profit) percentage and selling price.

Cost pricing formula = {100/(100 – Loss percent)} × SP is the formula that uses loss percentage and SP.

Solved example based on the Cost pricing formula

Example: The profit earned by the retailer is $60 on a toy that sells for $340. Using the cost price formula, determine the toy's cost price.

Sol: since we have, selling price = $340 and profit = $60
Using the cost price formula, we get
CP = Selling Price - Profit
= $(340 - 60)
= $280

Our experts prepared a List of all Maths formulas used in different calculations. 

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Cost Price Formula

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