Buying and Selling

To cover the costs of doing business

and to earn profit, retailers need
to sell their items at a higher price.
This is done by adding to the cost
of their merchandise an amount
called the mark-up.
A markup is an amount
added to the cost of
merchandise to obtain a
higher amount known as its
selling price.
If a business marks the price of a
T-shirt bought for P100.00 to sell
at P150.00, P150.00 is the
selling price, and the P50.00
added to the cost of P100.00 is
the markup.
Formula:
Markup = Selling Price – Cost
Selling Price = Cost + Markup
Cost = Selling Price – Markup
Markup = Markup rate x Cost

Selling Price = Cost + (Markup rate x Cost)

= Cost x (1 + Markup rate)

*Markup Rate is percentage of the cost of the

product.
A dealer bought 15 crates of
bananas at P11,250.00. If the dealer
imposed a 40% markup based on
the cost, find the
1. Cost per crate of bananas;
and
2. Amount of markup per crate of
bananas.
A shop sells a laptop
computer at P20,000.00.
If each computer costs
P16,500.00, what is the
markup rate?
A margin (or gross margin) is
the selling price minus the
cost of goods sold. It is
obtained by multiplying the
selling price by the
percentage margin.
Selling Price=Cost + (Percentage margin x Selling Price)

Cost = Selling Price – (Percentage x Selling Price)

= Selling Price x (1- Percentage Margin)

Selling price = Cost

1-Percentage Margin
A home appliance retailer bought
ten electric fans at P1,050.00 each.
He sold each unit with a 25%
markup based on the selling price.
Find the
1. Selling price for each electric
fan, and
2. Margin per electric fan
Markdown
A markdown, is a reduce in the
selling price of merchandise. It
is the difference between the
original selling price and the
reduced price.
Markdown = Original Selling Price – Reduced Price
Markdown Rate = Markdown
Original Selling Price

Markdown = Markdown Rate x Original Price

Reduced Price = Original Price – Markdown
= Original Selling Price – (Markdown
Rate x Original Price)
= Original Selling Price x (1-
Markdown Rate)
= Original Selling Price x (1-
Markdown Rate)
A Light-emitting diode
(LED) lamp regularly
priced at P1,948.00 is on
sale for P1,499.00.
Compute the markdown
and markdown rate.
During the clearance sale of
a furniture shop, a dining
set originally priced at
P42,000.00 was sold at 40%
markdown. What is the
reduced price?
A fish vendor bought 100 kilograms
of bangus at P66.00 per kilogram.
He originally set the selling price to
obtain a 40% gross margin.
However, to ensure that all will be
sold, he gave 15% markdown.
Detremine the orinal selling price;
reduced price; and amount of
markdown per kilogram.
Trade Discount
 isan amount deducted
from the list price of the
product.

*List price is the manufacturer’s

suggested retail price of a product.
Trade discount rate or rate of
discount
 A trade discount expressed
as a percentage of the list
price.
Net price or invoice price
 The resulting price after the
discount is applied.
METHOD 1. DISCOUNT METHOD

o This method is useful if you want to

know both the net price and the
actual amount of the discount.

Discount = Rate x List Price

Net Price = List price - Discount
An auto supply store sells auto
spare parts for P 9,600.00,
subject to a 12% trade
discount. Calculate the
1. Amount of trade discount,
and
2. Net price
Flor pays P 390.00 for the
dress listed at P 650.00.
What was the rate of
discount?
METHOD 2. COMPLEMENT METHOD
o The complement method involves computing the
complement rate, that is 100% minus the discount
rate. To apply the complement method find the
net price, we begin by subtracting the discount
rate from 100% to get the complement rate.

Complement Rate = 100% - Trade Discount

Net Price = Complement Rate x List Price
MULTIPLE DISCOUNT
A list price of a large screen
television set is P 27,450.00,
subject to 10%, 8%, and 5%
trade discounts. Compute
the net price of the
television set.
Computing the Equivalent Single
Discount Rate
o To compute the equivalent single discount
rate, we first deduct each rate in a discount
series individually from 100%.
o We then multiply the differences to get the net
invoice price rate.
o Finally, we deduct the net invoice price rate
from 100% to get the equivalent single trade
discount.

r = 1 – (1-r1) (1-r2)
A scientific calculator worth P
1,495.00 is subject to 10% and 5 %
trade discounts. Find the following;
1. Single trade equivalent to the
two trade discounts
2. Net price; and
3. Trade discount
A kitchenware supply store sells a
set of mixing bowls for a list price
of P 24,600.00, subject to 15%, 10%,
and 70% trade discounts. Find the
1. Single rate equivalent of the
discounts;
2. Net price; and
3. Trade discount.
A bookstore offers a 10%
discount to retailers. If a
math book priced at P
695.00 was sold at P 600.00,
compute the additional
trade discount given by the
bookstore.
Profit and Loss
Profit
o Is
the difference between gross
revenue and total cost, provided
that the revenue is greater that
the cost.
PROFIT = Revenue – Cost
Where Revenue > Cost
Juan sells bracelets to earn extra
cash. He sells them for P 20.00
each. To produce one
bracelet, he spends P 17.00 for
the needed materials. How
much is his profit if he was able
to sell 21 bracelets?
Maria owns a small pastry shop that
sells cupcakes. Last month, she
was able to sell 1,012 cupcakes
for P 45.00 each. To produce one
cupcake, she has to spend P 33.00
for the ingredients. Aside from the
cost of goods bought, she also has
to pay for rent and electricity that
amount to P 4,000.00 and P
2,300.00, respectively. How much
is her profit for the month, if any?
A small sari-sari store earned
a total of P 7,124.00 last
month. On the other hand,
its expenses included P
5,145.00 for groceries and P
2,100.00 for electricity. How
much was its profit, if any?
Avoiding Losses
The loss of business is the
difference between the
total cost and the
generated revenue,
provided that the cost is
greater than the
revenue.
Profit/Loss = Revenue-Cost

*where it is a Profit if
Revenue>Cost and a Loss if
Revenue<Cost
Since the store’s gross revenue is
P7,124.00, and the store’s total
cost is P7,245.00, the loss
incurred is:
Betty plans to sell customized bags in an
upcoming bazaar. To create one bag,
she has to spend P412.00 for the
materials, and she will sell it for P450. to
participate in the bazaar, she has to
pay participation and rental fees
totaling P5000.00. If she was able to
create 130 bags, and she believes she
can sell them all, should she participate
in the bazaar?
Andres designs and produces
customized shirts. He sells them
for P250.00 per shirt. Plain shirts
cost him P120, and his monthly
utilities (rent and electricity)
cost him P7,410.00. How many
customized shirts should he sell
to avoid incurring losses?
Breakeven
A business is breakeven if the total
revenue generated is equal to the
total cost incurred. The number of
items that needs to be sold to
attain this is called the breakeven
point.
A company sells tablets for
P4,300.00. If the cost to
produce one tablet is
P3,100.00, and the
company has a total fixed
cost of P36,000, determine
the company’s breakeven
points.
The total cost and the total revenue (in
hundreds of pesos) for the production
and sale of x watches are given,
respectively, by
C(x) = 15x + 600
R (x) = 25x
1. Find the profit function P(x).
2. Find the breakeven point(s).