If a person sells an article for $1200 at a profit of 20%, what was the cost pri

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Question: If a person sells an article for $1200 at a profit of 20%, what was the cost price?

Options:

Correct Answer: $1000

Solution:

Cost Price = Selling Price / (1 + Profit%) = 1200 / 1.2 = $1000

If a person sells an article for $1200 at a profit of 20%, what was the cost price?

If a person sells an article for $1200 at a profit of 20%, what was the cost price?

Step 1: Understand that the selling price is $1200 and the profit percentage is 20%.
Step 2: Convert the profit percentage into a decimal. 20% as a decimal is 0.20.
Step 3: To find the cost price, use the formula: Cost Price = Selling Price / (1 + Profit%).
Step 4: Substitute the values into the formula: Cost Price = 1200 / (1 + 0.20).
Step 5: Calculate (1 + 0.20) which equals 1.20.
Step 6: Now divide the selling price by 1.20: Cost Price = 1200 / 1.20.
Step 7: Perform the division: 1200 divided by 1.20 equals $1000.
Step 8: Therefore, the cost price of the article is $1000.

Profit Calculation – Understanding how to calculate cost price from selling price and profit percentage.
Percentage Increase – Applying the concept of percentage increase to determine the original value before profit was added.