The overhead charges become a part of the cost price. Often shopkeeper has to bear additional expenses such a lab our charges, freight charges, transportation charges, maintenance charges, etc., for the goods before they are sold. They are called overhead charges.
Thus, the effective cost price of the goods is given by:
Cost Price (C.P.) = Payment made while purchasing the goods + overhead charges.
Profit Percent and Loss Percent
For the purpose of the comparison of profit and loss in two sales, they are usually expressed as a percent of the cost price.
Profit percent = Profit/(C.P.) x 100;
Loss percent = Loss/(C.P.) x 100.
Formula that are used generally;
Cost Price (C.P.) made while purchasing the goods + overhead charges.
Profit = Selling price – Cost price (S.P. - C.P.),
Loss = Cost price - Selling price (C.P. - S.P.)
Profit % = Profit/(C.P.) x 100,
Loss % = Loss/(C.P.) x 100
● Profit And Loss.