Q.A dealer buys a table for ₹800 and spends ₹50 on its transport. He sells it for ₹1,020. Find his profit percentage.

The transport cost is an overhead that must be added to the purchase price to get the true cost price before the profit percentage is found.

The purchase price is ₹800, but ₹50 is spent on transport before the table can be sold. This overhead is part of the cost.

Step 1 — Find the total cost price.

Step 2 — Find the profit.

Step 3 — Convert to a percentage of the total cost price.

$\text{Profit}\%=\frac{170}{850}\times100=20\%.$ …

Ignoring the ₹50 transport cost and computing the profit on the bare ₹800 gives $\dfrac{1020-800}{800}\times100=27.5\%$, which overstates the gain. …