A shopkeeper marks an article at 40% above the cost price and allows a discount of 25%. What is the percentage profit or loss?
- AOption (a)
5% profit
- BOption (b)
15% loss
- COption (c)
5% loss
- DOption (d)
15% profit
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Correct answer
5% profit
Why this answer is correct
Shortcut Trick
Apply the Successive Percentage formula: Net % change = a + b + (ab/100)
Here, Mark-up (a) = +40 and Discount (b) = −25
Net change = 40 − 25 + [40 × (−25) ÷ 100]
Net change = 15 − 10 = 5%
Positive result indicates Profit.
∴ The correct answer is 5% profit.
Alternate Method
Given:
Mark-up Percentage = 40%
Discount Percentage = 25%
Calculations:
⇒ Let the Cost Price (CP) of the article be 100.
⇒ Marked Price (MP) = CP + 40% of CP = 100 + 40 = 140.
⇒ Discount = 25% of MP = (25/100) × 140 = 35.
⇒ Selling Price (SP) = MP − Discount = 140 − 35 = 105.
⇒ Profit = SP − CP = 105 − 100 = 5.
⇒ Profit Percentage = (Profit ÷ CP) × 100 = (5 ÷ 100) × 100 = 5%.
∴ The correct answer is 5% profit.
Additional Information
CP-MP Relation Formula
CP ÷ MP = (100 − Discount%) ÷ (100 + Profit%). This is extremely useful for finding any one unknown variable when others are given.
Markup Percentage
Markup% = [(Marked Price − Cost Price) ÷ Cost Price] × 100. It represents how much the price is increased over the cost before selling.
Successive Discounts
If two successive discounts d1% and d2% are given, the equivalent single discount is [d1 + d2 − (d1 × d2) ÷ 100]%.