SHS

Business Mathematics
Week 5a: Module 4
Business Mathematics
Grade 11 Week 5a: Module 4
First Edition, 2020

Copyright © 2020
La Union Schools Division
Region I

All rights reserved. No part of this module may be reproduced in any form without
written permission from the copyright owners.

Development Team of the Module

Author: Yves Jill M. Yukee

Editor: SDO La Union, Learning Resource Quality Assurance Team
Illustrator: Ernesto F. Ramos Jr., P II

Management Team:

ATTY. Donato D. Balderas, Jr.

Schools Division Superintendent
Vivian Luz S. Pagatpatan, Ph.D
Assistant Schools Division Superintendent
German E. Flora, Ph.D, CID Chief
Virgilio C. Boado, Ph.D, EPS in Charge of LRMS
Erlinda M. Dela Peña, Ed.D, EPS in Charge of Mathematics
Michael Jason D. Morales, PDO II
Claire P. Toluyen, Librarian II
Business Mathematics
Week 5a: Module 4
 Target

A buy-and-sell enterprise is nothing more than purchasing cheaply new or

previously owned products that we all need, use or want, and reselling these same
items for more than cost. The difference between what you paid and what you sold it
for, of course, is your profit (Stephenson,2005).

Buying ang Selling is said to be the New Economy. Many people choose to buy and
sell because it requires low investment and minimal skills, it has minimal financial
risk, it is incredible for profit potential, and you can work from home.

In your previous lesson, you learned how to solve problems involving fractions,
decimals and percent. Buying and selling is one of the interesting applications of
percent in real life.

This module will provide you with information and activities that will help you
understand the key concepts in buying and selling.

After going through this module, you are expected to:

1. Differentiate Mark-on, Mark down and Mark-up (ABM_BM11BS-Ig-1

Before going on, check how much you know about the topic.
Answer the pretest on the next page in a separate sheet of paper.

1
 LESSON 1
CONCEPTS ON BUYING
AND SELLING

2
Pre-Test

Directions: Read Carefully each item. Use a separate sheet for your answers. Write
only the letter of the best answer for each item.

1. Which of the following terms is/are usually computed based on cost price?
A. Mark-up only C. Mark-up and Mark-on
B. Mark-down only D. Mark-on and Mark-down
2. Which of the following terms is the usual basis for computing Mark-down?
A. Cost price B. Operating Expenses C. Profit D. Selling price
3. Which of the following terms is the usual basis for computing Mark-up?
A. Cost price B. Operating Expenses C. Profit D. Selling price
4. Which of the following situations can justify a mark-on?
A. There is an increase in supply C. Item is dirty
B. A calamity occurred D. There is an decrease in demand
5. Which of the following situations can be a reason for mark-down?
A. There is an increase in demand C.A competition occurred
B. Items sold are in demand D. There is a special occasion
6. Which detail/s justify the amount of mark-up for an item or product sold?
A. Cost B. Cost and Profit C. Operating Expenses and Profit D. Selling Price
7. What inference can you make when an item was sold at a price which is lower
than its cost?
A. The transaction is break-even C. There is a gain in the
transaction
B. The transaction gives a loss to the store D. The transaction is a failure
8. Candy went to a mall because she needed a new laptop . She was happy to see
that that the item is on sale at 30% off. This situation is an example of
_____________________.
A. Mark-down B. Mark-on C. Mark-up D. Mark-down and Mark-up
9. Troy bought a dozen of pencils for PhP150. After considering the profit and
other expenses she incurred, she decided to sell each rose for PhP14. This
situation is an example of _________________.
A. Mark-down B. Mark-on C. Mark-up D. Mark-on and Mark-up
10.Maria went to buy cheeze at the grocery store a day before New Year. She
noticed that there was a price increase of PhP8. This situation is an example
of ________________.
A. Mark-down B. Mark-on C. Mark-up D. Mark-on and Mark-down

3
 Jumpstart

For you to understand the lesson well, do the following activities.

Good luck!

Activity 1: How Much?

Directions: Read the situation and answer the given questions that follow.

There will be a food sale in your school where you will have to sell Camote cue to
your schoolmates for one week.

Questions:
1. What are the things to consider in determining how much you should sell a
stick of Camote cue? Check box which corresponds to your answer. You can
chose more than one option.
Things to consider in computing the selling price of Camote Cue Check
here
1. The raw materials needed to make s Camote cue
2. The number of sticks you intend to sell
3. The cost of raw materials used to make Camote cue
4. The expenses incurred in producing the product
5. The amount of profit you plan to have per stick of camote cue

2. Estimate the cost of the raw materials and other expenses needed for the
Camote cue. Put zero if you think the item is not necessary.
Raw Materials Estimated Other Estimated
cost Expenses cost
5 kg Camote Rent
50 pcs Sticks Cook’s Salary
1 kg Sugar Tissue
1 L Cooking Oil Wrapper
LPG
Fare
Total Total

3. Based from these estimates, how much will you sell a stick of Camote cue?
Explain how you arrived with your answer.

4
 Discover

To understand the concept of Mark-on, mark-up and mark down, let us first define these important
terms used in business.

PRICING
Setting prices is another application of our knowledge on percentage. Trading or
merchandising firms and manufacturing firms make use of of pricing decisions.
Trading or merchandising firms are those who do “buy and sell”. It means they sell
what they buy. Manufacturing firms are those who buy raw materials, process them
and sell finished products.
Setting the right price is important for goods to sell. If the price is too high, the
customers may not be able to afford it; if it is too low, the company may not be able to
make a profit. Aside from the cost of the product, operating expenses should be
considered for the company to earn a profit.
To be able to set the correct selling price of your product, you have to understand
the following terms: cost price, operarting cost, selling price, profit, mark-up, mark-on
and markdown.

COST PRICE
This refers to the purchase price of a product that a company or store is going to
sell. For example, if a store owner bought a T-shirt for PhP150 this is the cost price of
the product as far as the store owner is concerned.
It is also the price that has to be spent to produce goods or service before any profit
is added. This is usually computed on per unit basis.
In our previous activity, the cost price refers to the price of raw materials needed to
produce a Camote cue. For instance, if the total cost of the raw materials is PhP400
which will produce 50 sticks of Camote cue, divide the total cost with the number of
sticks to be sold. Then, the cost price of each stick is PhP8.

OPERATING COST
This refers to the price (per unit) incurred relative to the production and sale of
commodity. This includes other expenses like rent, staff salaries, travel expenses and
other incidental expenses.
Operating cost can also be set as a percentage of the cost price. For example, the
operating cost for a T-shirt purchased from divisoria at PhP200can be set at 25% of
the cost price. In this case, the operating cost is PhP50 (multiply rate of operating cost
0.25 with cost price 200).

5
 In our previous activity, the operating cost refers to the other expenses incurred to
produce Camote cue. For Instance, if the total operating expenses in producing 50
sticks of Camote cue is PhP150, then the operating expense per stick is PhP3 (divide
total cost by number of sticks produced).

SELLING PRICE
This refers to the price at which the product or item is sold per unit. The selling
price is obtained using the given formula below.

SELLING PRICE = COST PRICE + OPERATING EXPENSES+PROFIT

S=C+E+P
Where S = Selling Price
C = Cost Price
E = Operating Expenses
P = Profit

PROFIT
It is the money earned after the cost price and operating expenses are accounted
for after the sale of a commodity.
In our previous activity, we assumed that the estimated cost of raw materials is
PhP400 and the other expenses is estimated to be PhP 150. From the raw materials,
bought we estimated that 50 Camote cue sticks will be sold. With that, cost price is
divided by 50 to obtain the cost per stick of camote cue. That is PhP 8 per stick. The
operating cost per unit is also obtained by dividing the estimated total expenses by 50.
Then the operating cost per stick of camote cue is PhP3. If we set our profit to be 25%
of the cost price per stick, we obtain the amount of profit by multiplying .25 with 8
that is PhP2 per stick. We can now obtain the selling price of the camote cue using
the given formula.
S=C+E+P
S=8+3+2
S = 13
Therefore, for us to achieve the desired profit of 25%, we have to sell a stick of
Camote cue at PhP13.

After learning how to set the selling price of a product, let us learn what mark up,
mark on and mark down is all about.

MARK-UP
This refers the amount added to the cost price to determine the selling price. It is
also defined as the difference between the selling price and the cost price and
sometimes refered to as GROSS PROFIT. It can also be expressed as a percentage
above the cost.
For example, a T-shirt bought at PhP150 is sold at PhP200, the difference which is
PhP50 is the mark-up of the T-shirt. In our previous activity, the mark-up is PhP5
because the cost of each Camote cue is PhP8 but sold at PhP13 each.

Mark-up value is usually computed based on cost. Mark-up in percent or mark-up

rate on the other hand can be computed based on either cost price or selling price.

6
MARK-ON
This refers to the additional increase in the price of the product or item most
common during various seasons or holidays like two weeks before Cristmas due to the
increase of demand. Mark-on is usually computed based on selling price.
For example during the food sale, you realized that there is a high demand for your
Camote cue and you want to take advantage of this peak season, thus you decide to
increase the price from PhP13 to PhP15. The additional increase on the price is called
mark-on.
The other reasons why mark-on becomes an option for the business owner are the
following:
1. A calamity has hit the source of raw material or commodity therefore affecting
its supply. ( price of alcohol increased due to pandemic)
2. Seasonal Demands. ( Christmas, Valentine’s , etc.)
3. Special occassions is being celebrated. (commemorative items like t-shirts, etc.)

MARK-DOWN
This refers to reduction in the selling price of an item to stimulate its demand or to
drive a competitor out of the market. Sometimes, markdowns are created to remove a
slow-selling item from the inventtory. The rate of mark-down is always computed
based on selling price.
The other reasons why mark-downs are sometimes thought of as an option for a
business owner are the following:
1. The item is a perishable item and it is best to dispose of it sooner that simply
throw it away. (cooked food, fruits, vegetables, etc.)
2. The item has become dirty or worn out, or possibly out of style.
3. Competition forces the marking down of an item.

After considering that the sale of your Camote cue is coming low, you may need to
sell it at a DISCOUNTED PRICE or what is commonly known as SALE PRICE. You
may decide to sell you Camote cue at a discounted price of PhP11 which covers the
cost price and the operating expense but zero or no profit. The price which give a zero
profit is also called the BREAK-EVEN PRICE. You may also decide to simply sell it at
PhP8 each to only cover the cost price. With this, price, you will have a negative profit
which is said to be LOSS.

7
 Explore

Here are some enrichment activities for you to work on to master and strengthen the basic concepts
you learned from this lesson

Activity 1.Can you Tell?

Directions: Tell whether the situation is an example of Mark-up, Mark-on or Mark-
down.

SITUATIONS ANSWER
1. A T-Shirt bought at PhP150 was sold for PhP200.
2. A blouse originally priced at PhP500 is on sale for only
PhP350.
3. A chocolate bar originally priced at Php80 is now being sold
for Php100.
4. The cost of a dozen of apple is PhP200. A store owner sell
each apple for PhP20.
5. Carl bought a pair of shoes regularly priced at Php4,000 for
only PhP2,500.
6. A story book regularly priced at PhP850 was sold at 30%
discount.
7. Ben is waiting for a pair of sunglasses curretly priced at
PhP1,200 to be sold at a sale price of PhP800.
8. A jacket which costs PhP950 is being sold at P1,575.
9. During All Saint’s Day, a bunch of flowers regularly priced at
PhP150 was being sold for PhP200.
10. An on-line seller wants to realize a PhP50 profit and set the
operating expenses at 25% based on cost.

Activity 2. Do you Agree?

Directions: Read the statements below. Decide whether you agree or not. Check the
box corresponding to your answer.

Do you agree with these statements? YES NO

1. Mark-up is the sum of the operating expense and profit.
2. Mark-on becomes an option to store owners because of insufficient
supply.
3. Mark-down helps to stimulate sales of slow selling products.
4. Mark-up is also called Gross Margin.
5. Mark-on becomes an option to store owners to take advantage of the
high demand.
6. Mark-down is an option for store owners to clear the inventory.

8
7. Mark-up, Mark-on and mark-down can be expressed as a
percentage.
8. Mark-down is getting advantage of high demand.
9. Mark-up can be computed when the selling price and cost price of
the product are given.
10. Mark-down may lead to a zero or negative profit.

Activity 3. What is the difference?

Directions: Reflect on the lesson learned and carefully fill in the table.

WORD DEFINITION FACTS/ EXAMPLES

(Use your own words) CHARACTERISTICS (Situations where
(Basis and Reasons they are applied)
for computation)

MARK-UP

MARK-ON

MARK-DOWN

9
 Deepen

Pretend that you are planning for a simple food sale in your school to raise funds
for your organization plans to pursue.
You may choose to sell icecream, fishballs , hot dog, kakanin, sago’t gulaman, etc.
Choose a name for your product. Example: Meryl’s Ice Cream
1. After identifying what you are going to sell, prepare the list of prices for all the
materials needed. Base the amount and cost of materials on the number of
items you intend to sell in one day. Present your materials, costs and other
expenses using tables.
2. Determine the cost price of each item. Explain how you arrived with the amount.
3. Determine the selling price of each item using 30% profit based on cost. Show
complete solution.
4. Answer the following questions:
a. How much is the mark-up per unit/item?
b. Is there a possibility for you to mark-on your product?Explain your answer.
c. Is there a possibility for you to mark-down your product?Explain your
answer.

Rubric for Scoring the Output.

EVALUATION
1 (NOT 2 (NEEDS 3 (MEETS 4 (EXCEEDS
VISIBLE) IMPROVEMENT) EXPECTATIONS) EXPECTATIONS)
Reasoning There is little There is some Uses effective Uses complex and
evidence of evidence of mathematical refined
good mathematical reasoning. mathematical
mathematical reasoning. reasoning.
reasoning.
Strategy Rarely uses An efficient and
Typical effective
good strategy Use of effective effective strategy
strategies are put
to go about strategy is not is put to use in
to use in solving
solving the very consistent. solving the
the problem.
problem problem.
Explanation Explanation Explanation was
was difficult to a little difficult to
understand understand but Explanation is Explanation is
and was included critical clear. detailed and clear.
missing several components.
components.
Presentation Student did not Used effective Used appropriate
use any visual visual Used effective and effective
representation representation visual visual
but not consistent representation presentation of
the

10
 Gauge

Directions: Read Carefully each item. Use a separate sheet for your answers. Write
only the letter of the best answer for each item.

1. Which of the following terms is/are usually computed based on selling price?
A. Mark-up only C. Mark-up and Mark-on
B. Mark-down only D. Mark-on and Mark-down
2. Which of the following terms is the usual basis for computing Mark-on?
A. Cost price B. Operating Expenses C. Profit D. Selling price
3. Which of the following terms is the usual basis for computing Mark-up?
A. Cost price B. Operating Expenses C. Profit D. Selling price
4. Which of the following situations can justify a mark-on?
A. There is an increase in supply C. Item is dirty
B. Competition occurred D. There is an increase in demand
5. Which of the following situations can be a reason for mark-down?
A. There is an increase in demand C. A calamity occurred
B. Items sold are perishable D. There is a special occasion
6. Which detail/s justify the amount of mark-up for an item or product sold?
A. Cost B. Cost and Profit C. Operating Expenses and Profit D. Selling Price
7. What inference can you make when an item was sold at a price which is the
same as its cost?
A. The transaction is break-even C. There is a gain in the
transaction
B. The transaction gives a loss to the store D. The transaction is a failure
8. Tina bought a dozen of roses for PhP120. After considering the profit and other
expenses she incurred, she decided to sell each rose for PhP15. This situation
is an example of _________________.
A. Mark-down B. Mark-on C. Mark-up D. Mark-on and Mark-up
9. Mario went to buy condensed milk at the grocery store a day before Christmas.
He noticed that there was a price increase of PhP5. This situation is an
example of ________________.
A. Mark-down B. Mark-on C. Mark-up D. Mark-on and Mark-down
10.Carol went to a mall because she needed a new bag for the opening of classes .
She was happy to see that her favorite brand is on sale at 30% off. This
situation is an example of _____________________.
A. Mark-down B. Mark-on C. Mark-up D. Mark-down and Mark-up

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References
Printed Materials:
Department of Education. K-12 Basic Education Curriculum, Business
Mathematics Teacher’s Guide. Pasig City, Philippines, 2016.

Lopez-Mariano, Norma D. Business Mathematics. Quezon City: Rex Book Store, Inc.,
2016.
Website:
Business dictionary. Accessed July 23, 2020.
www.businessdictionary.com/definition/mark-down.html
Corporate Finance Institute. What is Mark-up? Accessed July 23, 2020.
https//corporatefinanceinstitute.com/resources/knowledge/accounting/mark-up/
Stephenson, James How to Buy and Sell for a Living. Accessed July 23, 2020.
https://www.google.com/amp/s/www.entrepreneur.com/amphtml/74316

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Answer Key:
Activity 1: How Much?
Directions: Read the situation and answer the given questions that follow.

There will be a food sale in your school where you will have to sell Camote cue to
your schoolmates for one week.

Questions:
1. What are the things to consider in determining how much you should sell a
stick of Camote cue? Check box which corresponds to your answer. You can
chose more than one option.
Things to consider in computing the selling price of Camote Cue Check
here
1. The raw materials needed to make s Camote cue check
2. The number of sticks you intend to sell check
3. The cost of raw materials used to make Camote cue check
4. The expenses incurred in producing the product check
5. The amount of profit you plan to have per stick of camote cue check

2. Estimate the cost of the raw materials and other expenses needed for the
Camote cue. Put zero if you think the item is not necessary.
Raw Materials Estimated Other Estimated
cost Expenses cost
5 kg Camote 200 Rent
50 pcs Sticks 15 Cook’s Salary
1 kg Sugar 60 Tissue 30
1 L Cooking Oil 80 Wrapper 20
LPG 100
Fare 40
Total 355 Total 190
Accept any answer for 1 and 2
3. Based from these estimates, how much will you sell a stick of Camote cue?
Explain how you arrived with your answer.
Solution:
a. Solve for Cost per stick .
(total cost + total expenses) ÷ ( number of sticks)
b. Compute for the selling price by adding a reasonable amount as profit to the
cost per sstick
Pre-Test
1. A 6. C
2. D 7. B
3. A 8. A
4. B 9. C
5. C 10. B

13
Explore
Activity 1.Can you tell?
1. Mark-up
2. Mark-down
3. Mark-on
4. Mark-up
5. Mark-down
6. Mark-down
7. Mark-down
8. Mark-up
9. Mark-on
10.Mark-up
Activity 2. Do you Agree?
1. Yes 6. Yes
2. Yes 7. Yes
3. Yes 8. No
4. Yes 9. Yes
5. Yes 10. Yes
Activity 3.What is the difference?
EXAMPLES
WORD DEFINITION FACTS/ (Situations where
(Use your own words) CHARACTERISTICS they are applied)

It is the amount added -It is used everytime When you buy a t-

to the purchase price you buy and sell shirt at PhP100
MARK-UP products and you sell it at
-computed based on PhP150, the mark
cost up is PhP50

It is the amount added -It used during a During Christmas,

to the selling price high demand or the T-shirt can be
MARK-ON insufficiency of sold at PhP200
supply from the original
-computed based on price of PhP150
selling price with a mark-on of
PhP50
It is the amount of -It is used to clear The T-shirt is old
discount the inventory list fashioned so we
MARK-DOWN -computed based on sell it at a lower
selling price price from the
original price of
PhP150 to PhP125
with a markdown
of PhP25

14
Deepen
Sample Output
Rona’s Banana Cue

1. No. of Sticks to sell daily: 100 pcs

Raw Materials Cost Other Expenses Cost

100 pcs of Banana PhP 400 Tissue PhP 35
(Saba)
(approximately 20
Kg)
100 pcs Sticks Php 20 Wrapper PhP 20
(skewer) (For take out)
1 Kg Brown Sugar Php 60 LPG (Butane) PhP 100
1 L Cooking Oil Php 85 Fare PhP 20
Total PhP 565 Total Php 175
2. The Cost Price is computed by dividing the total cost of raw materials with the
number of banana cue sticks.
Cost Price = 565/100
= 5.65
Therefore, the cost of each stick of banana cue is P5.65
3. Solve for the Selling Price.
Remember that Selling Price = Cost + Operating Expenses + Profit
Solution:
a. Compute for Operating expenses.
E = total expenses ÷ no. of sticks
= 175 ÷100
= 1.75
The operating expenses for each stick of banana cue is PhP1.75
b. Solve for the Profit
P = 30% of Cost
= 0.30 x 5.65
= 1.70
The profiit for each banana cue is PhP1.7O
c. S = C + E + P
= 5.65 + 1.75 + 1.70
= 9.10
The selling Price of Each Banana Cue is PhP9.10
4. Answer the following questions:
a. How much is the mark-up per unit/item?
PhP3.45
b. Is there a possibility for you to mark-on your product?Explain your answer.
Yes. When I notice that I am the only one selling the banana cue and I
notice that there are many customers who wants to buy, I can sell my
banana cue at P10.00 each.
c. Is there a possibility for you to mark-down your product?Explain your
answer.

15
 Yes. If I notice that it is almost end of the day and there are still some
unsold sticks of banana cue, I will sell it at a lower price so that at least I
can get back the cost of mareials I spent.

Gauge
1. D
2. D
3. A
4. D
5. B
6. C
7. B
8. C
9. B
10. A

16