BUSINESS

MATHEMATICS
 Institutional Prayer
All:
Lord, we turn our life and will over to You
That we will cease to struggle alone
But instead allow You to lift us up
On eagle’s wings.
Leader:
Saint Michael, defender of the Church of
God,
take us under your care and protection.
All:
This we humbly pray.
Amen
COURSE OUTLINE IN BUSINESS MATHEMATICS
SECOND LONG TEST
Lesson 3 BUYING AND SELLING
Lesson 4 SALARIES AND WAGES
FINALS
Lesson 5 PRESENTATION AND ANALYSIS OF
BUSINESS DATA
This PPT contains:

• Lesson 3 BUYING AND SELLING

I. Objectives/Expected Outcomes/Competencies:
At the end of this lesson, you should be able to:
1. Differentiate Mark-on, Mark down, and Mark-up, mark-up from
margins, and profit from loss
2. Define and illustrate break-even, and the different types of
commissions.
3. Compute for mark-on, mark down, and mark up, single trade
discounts and discount series, and profit/loss
In a business, or in putting up a
business, what must be considered to at
least reach the optimum chance of
success?
MARK-ON, MARK-UP, AND MARKDOWN
❑ An important principle in retail business is the proper
pricing of its merchandise. Wrong pricing may lead to small
profit or heavy loss.
❑ The cost price (Mo) is the original price of the
merchandise paid by the retailer. The retailer must add an
additional amount called the markup (Mu) to its cost to
cover its business and to provide a profit (P).
MARK-ON, MARK-UP, AND MARKDOWN
❑ However, in reality, not all businesses make money. A
business incurs operating expenses (E) such as: rents,
lighting, wages, commissions, bonus and other operating
expenses. The markup must be able to cover the operating
expenses. If markup is greater than operating expenses,
net profit is achieved, expenses are covered. However, if
markup is less than operating expenses, loss is incurred.
MARK-UP AND GROSS MARGIN
• Businesses buy products at an original price (cost price)
and then markup the products to cover the expenses
(overhead) of running the business and the desired profits.
• The sum of cost and markup gives the selling price.
Markup is also referred to as margin or gross profit. In
other words, markup (or gross profit or gross margin) is the
difference in the retail/selling price and cost/original price.
S = Mo + Mu; Mu = S – Mo; Mg = S – Mo
MARK-UP AND GROSS MARGIN
• Aside from the previous formula, consider also the
following for SELLING PRICE:

Selling Price = Original/Cost Price + Operating Cost + Profit

S = Mo + E + P
MARK-UP RATE AND GROSS MARGIN RATE
SOLUTION:
To solve for this, the markup/gross margin must be computed
first.
Markup/Gross Margin = S – Mo = P1250 – P1000 = P250
MARKDOWN
MARKDOWN
EXAMPLE:
1. Aling Ana would like to sell little trinkets she purchased
from Divisoria for Php12 each. If the operating cost is set at
25% of the cost and she would like to have 15% profit on
the cost of each item,
a. Determine the mark-up price for each trinket.
b. Help Aling Ana determine the selling price for each
trinket.
EXAMPLE:
Solution: a) Since S is unknown, consider the formula:
S = Mo + E + P
If Mu = S – Mo, then Mu is also equal to E + P.
Applying that we have: Mu = E + P

The mark-up price for each

trinket is Php4.80.
EXAMPLE:
b) S = Mo + Mu
Aling Ana should sell each
trinket at Php16.80.
EXAMPLE:
3.Julia buys a notebook with a cost of Php45. The rate of
mark-up based on cost is 25%. Find the selling price and
the mark-up.
Solution:

The selling price of Julia’s notebook is Php56.25 which

includes a mark-up of Php11.25.
PRACTICE:
4. Peter decides to impose a mark-up of Php 5 on each
pen he sells to his classmates and friends. This represents
a 20% mark-up based on the selling price. Find the cost
and the selling price of the pens Peter sells.
Solution: Mu or Mg = S – Mo
Mo = S – Mu
Mo = 25 – 5 = Php 20
The selling price is Php 25 and the pen costs him Php 20 each.
PRACTICE:
5. Bareg purchased a laptop for Php 22,000. After a few
months, he purchased a new laptop and decided to sell his
older laptop at a price that is 40% lower than its original
price. How much should he sell his older laptop?
Solution:
Bareg should sell his older laptop at a
price of Php13,200.
 MARK-ON
❑ During an actual “sale”, when an owner realizes that there is such a
high demand for his/her product and that buyers can easily afford the
selling price that’s been pegged, he/she would want to take
advantage of this peak season and thus, INCREASE the prices
already pegged for the said commodity. This is MARK-ON.
MARK-ON = PEAK SELLING PRICE – REGULAR SELLING PRICE
MO = PS – S
PS is Peak Selling Price S = Regular Selling Price
Example:

Yvette’s Flower Shop imposes a 45% mark-up on flowers

delivered to them for sale. During All Saint’s Day, however, an
additional mark-on of 25% of the regular price is added on.
Determine the unit price of 300 roses worth P15,000 delivered
to Yvette’s Flower Shop during All Saint’s Day. How much is
the selling price of each rose during All Saint’s Day at this
flower shop?
Solution:
PS = S + MO
PS = 72.50 + 18.15
Mu = 0.45 x 50 = Php 22.50
= Php 90.65
S = Mo + Mu
S = 50 + 22.50 = Php 72.50 Each rose sells for Php 90.65
at Yvette’s Flower Shop during
MO = 0.25 x 72.50
All Saint’s Day.
MO = Php 18.15
 SINGLE-TRADE DISCOUNT AND DISCOUNT SERIES
❑ The supplier usually recommends the suggested retail price of an
item. However, because there is a line of other people who are
involved in bringing an item to the hands of the consumer, these
middlemen expect their own share of profit also.
❑ Hence, the supplier normally gives them a special discount to grant
them a small room for profit.
❑ THIS DISCOUNT IS CALLED TRADE DISCOUNT.
 SINGLE-TRADE DISCOUNT AND DISCOUNT SERIES
❑ Single trade discounts are commonly known as “one-off” discounts
that your business offers to customers or clients when their
purchases meet a specific condition that would trigger that discount.

Ex. If you run an automotive parts business, you could offer a retailer a
10 percent discount if the retailer orders Php300,000 or more worth of
merchandise. This is a one-off because the discount only applies if the
retailer can meet the specific condition that you’ve established.
 SINGLE-TRADE DISCOUNT AND DISCOUNT SERIES
❑ A discount series refers to a discount that you offer based on
several different conditions. Rather than just offering the discount
after one condition is met, the discount series requires purchasers to
meet different conditions at different times.

Ex. Let’s say you sell wholesale auto parts. You might offer a 20/10/5
split in which you provide a 20 percent discount as a promotion, a 10
percent discount if the client buys at a certain volume, and a five
percent discount if payment is made within 30 days.
DIFFERENCE BETWEEN SINGLE-TRADE DISCOUNT AND DISCOUNT SERIES

Example 1: If the discount offered is 35 percent and the total value of

the goods sold are P100,000 (list price), the single discount formula
would be:
D = r • Mo (r is rate and Mo is Original Price/List Price)
P100,000 x 35 percent = P35,000 discount.

In contrast to the single discount formula, however, the discount series

yields a lower discount in this case. The effective 20/10/5 discount is
found by applying each discount successively.
DIFFERENCE BETWEEN SINGLE-TRADE DISCOUNT AND DISCOUNT SERIES

Using the previous example, the 20 percent discount reduces the

P100,000 to P80,000; the 10 percent discount reduces the remaining
P80,000 to P72,000; and the 5 percent discount reduces the
remaining P72,000 owed to P68,400, making the total discount equal
to P31,600. As you can see, the discount series would be P4,400
less than what was used applying the single discount formula.
Example 2: Dominador will buy a box of canned tuna that lists for
P680 and has a trade discount of 25%. How much is the Net Price?
Solution:
Applying D = r • Mo, Discount = 0.25 x P680 = P170
If NP = Mo – D, where NP (Net Price) is the total discounted price,
then, Net Price = P680 – P170 = P510
Note: NP, in a way, is the same with S (selling price) and it also
applies to Trade Discount Series
PROFIT, LOSS, AND BREAK-EVEN POINT
PROFIT, LOSS, AND BREAK-EVEN POINT
PROFIT, LOSS, AND BREAK-EVEN POINT
PROFIT, LOSS, AND BREAK-EVEN POINT
PROFIT, LOSS, AND BREAK-EVEN POINT
Break-even point refers to the revenues necessary to cover a
company's total amount of fixed and variable expenses during a
specified period of time. In simple words, the break-even point can
be defined as a point where total costs (expenses) and total
sales (revenue) are equal. Break-even point can be described as a
point where there is no net profit or loss. The firm just “breaks even.”
Any company which wants to make abnormal profit, desires to have a
break-even point.
PROFIT, LOSS, AND BREAK-EVEN POINT
COMMISSIONS
• Commission is a payment made to employees based on the value of
sales achieved. It can form all or (more often) part of a pay package.
Commission is, therefore, a form of "incentive pay" (see also
profit-related pay, bonuses).
• Commission, like piece-rates, is a reward for the quantity or value of
work achieved. In most cases, the employee is paid a flat percentage
of the value of the good or service that is sold.
• The rate of commission depends on the selling price and the amount
of effort required in making the sale.
 TYPES OF COMMISSION
1. STRAIGHT COMMISSION, also known as REVENUE COMMISSION
– is a commission based on a percentage of sales only. (This is profitable
if you are selling high-ticket items.
2. SALARY PLUS COMMISSION
– is a commission in which salesperson gets his basic salary and a
percentage of whatever sales he makes.
3. GRADUATED COMMISSION
– is a commission which varies according to how much sales is made.
Goodbye and Keep Safe!