If cost price of an item is 90% of its selling price, then what is the profit percentage?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → \(11\frac{1}{9}\)%
Profit per cent is always worked out on the cost price, not on the selling price, so the profit is divided by the cost price.
Assuming the selling price to be 100:
Cost price \(=90\%\) of 100 \(=90\)
Profit \(=100-90=10\)
Profit per cent \(\displaystyle =\frac{10}{90}\times100=\frac{100}{9}=11\frac{1}{9}\%\)
The figure 10% in Option (2) is the profit taken on the selling price; on the cost price of 90, the same profit of 10 is \(11\frac{1}{9}\%\).