Profit and Loss Calculations on CP/SP A company has invested in a new product and expects it to generate revenue of $10,000 in the first year. The cost pric...
Profit and Loss Calculations on CP/SP
A company has invested in a new product and expects it to generate revenue of 8,000. Calculate the profit or loss on the investment after considering the following:
Cost price: $8,000
Revenue: $10,000
Profit/Loss = Revenue - Cost price
Profit = 8,000 = $2,000
Therefore, the company has a profit of $2,000 on the investment.
Loss Calculation:
If the company had purchased the product for 10,000, the loss would be:
Loss = Difference between purchase price and sale price
Loss = 8,000 = $2,000
Note: Loss is calculated as negative because the company spent money to acquire the product and is now selling it for less than its cost