# Calculating Cost Price – Definition, Formula, Examples | How to Calculate Cost Price?

We are all familiar with buying and selling goods or things. There are some specific terms in the retail systems they are cost price, selling price, profit, loss, etc. In this article, we will focus on cost price and how to calculate the cost price. Cost price deals with the money that it costs to manufacture the products. Read the entire article to see the questions on calculating cost price. Thus we advise the 5th grade students to make this page as a reference and practice the problems on calculating the cost price.

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## What is Cost Price?

The cost price is how much it costs to make each product. The cost price is very important for a business person. Your profit and losses will be decided by the cost price. So, it is necessary to know about calculating the cost price. How much profit is needed on each product is known by calculating the cost price.
Cost Price = Labor + components + tools + marketing costs + overheads

### Importance of Calculating Cost Price

The calculation of costs is important, regardless of whether the group is doing it in a satisfactory manner or not. It is only when women know how much each product costs, that they can price the product in a satisfactory manner. This is important to calculate costs because it is possible to cut costs only by attending to details. The major cost in the cost price is raw material.

For example, In one group each woman purchases the vegetables to make herbal sweets at home and brings them to the group for sale. In another group, each woman buys cotton, weaves at home, and brings the items for sale. These two groups may save costs if they put the raw material together. The simplest way to reduce the cost of raw materials is by making a bulk purchase.

### Cost Price Formulas

Cost Price = selling price – profit
Cost price = selling price – Profit Percentage/100 × cost price
Cost price = (Selling Price × 100)/(100 + Profit Percentage)
Cost Price + (Profit Percentage/100) × cost price = selling price
Cost Price(1 + profit percentage/100) = selling price

### Examples on How to Calculate Cost Price of a Product

Example 1.
A tennis ball sold for Rs. 240 they gained 4%. Find the cost price of the ball?
Solution:
Given that,
Selling price = Rs.240
They gained = 4%
Cost price = (Selling Price × 100)/(100 + Profit Percentage)
Cost price = (240 × 100)/100 + 4
= 24000/104
= 230.7
Thus the cost price of the ball is Rs.230.7

Example 2.
Ramya sold a set of flowers for 80 and she gained 2%. Find the cost price of the flowers.
Solution:
Given that,
Selling price = 80
They gained = 2%
Cost price = (Selling Price × 100)/(100 + Profit Percentage)
Cost Price = (80 × 100)/(100 + 2)
= 8000/102
= 78.43
Thus the cost price of the flowers is $78.43 Example 3. Raju sold a bike for 35000 he gained 20%. Find the cost price of the bike. Solution: Given that, Selling price = 35000 They gain = 20% Cost price = (Selling Price × 100)/(100 + Profit Percentage) = 35000 × 100/(100 + 20) = 3500000/120 = 29,166.6 Thus the cost price of the bike is$29,166.6

Example 4.
A book was sold by $200 thereby gaining 10%. Find the cost price of the book. Solution: Given that, Selling Price =$200
they gain = 10%
We know that the formula to calculate the cost price is
Cost Price = (Selling Price × 100)/(100 + Profit Percentage)
= $200 × 100/100 + 10 =$20000/110
= $181.8 Thus the cost price of the book is$181.8

Example 5.
A doll was sold for $100 thereby gaining$36. Find the cost price of the doll.
Solution:
Given that,
Selling Price = $100 Profit =$36
We know that the formula to calculate the cost price =  selling price – profit
C. P = $100 –$36
Thus Cost Price of the doll = \$64

### FAQs on Cost Price

1. What is the cost price?

The amount paid to purchase a good or the price at which a product or good is made is known as its cost price.

2. How to find the cost price?

Cost price when there is a profit
Cost Price = 100/(100 + Profit%) × selling price
Cost price when there is a loss
Cost Price = 100/(100 – loss%) × selling price

3. What means the cost price?

Cost Price is the original price of an item.

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