Business

Mathematics

Lessons 5-8
 Lesson
Mark-up, Mark down and
5 Mark-on

This Module is intended for the fifth week of the first quarter of Business
Mathematics. It will help the students to understand the proper setting of price for a
commodity or product. With the use of this module, students can differentiate Mark-
up, Markdown and Mark-on and illustrate how to obtain Mark-up, Markdown and
Mark-on given price of a product.

You have learned from our previous lesson that percentage is the part of a
whole and the number being compared to another number (base). It is also the result
obtained when the rate is applied to the base. Percentage is calculated by multiplying
the base to the rate. In dealing with problems involving percentage we use the
fundamental formula on solving percentage and these are as follows:

𝑷 𝑷
𝑷 = 𝑩𝒙𝑹, 𝑩= , 𝑹=
𝑹 𝑩
REVIEW:

Solve for the percentage, rate and base.

1. In a box of ball pen, 15 pieces are broken. If this is 12% of

the total number of ball pen in the box, how many ball pens
are there?

2.What is 13% of 500?

3. Find 25% of 450

4. In a population of 1,500, how many percent of the

population are male if there are 600 males?
5. 55 is what percent of 135?

The concept of percentage is needed in differentiating and obtaining Mark-on,

Markdown and Mark-up given a price of a product.
Setting prices is another business application of our knowledge on percentage.
In trading or merchandising firms, those who do “buy and sell,” meaning what they
buy, they sell, and in manufacturing firms, those who buy raw materials, process
them and sell the finished products, and make use of pricing decisions. Mariano,
(2016)

In order to solve for the markup, we need to add the expenses and profits from
a business. The company may sell the product by adding the cost and the markup.

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 To understand this kind of problem, you must understand first the basic
terminologies used in setting price for a commodity or product.

In engaging to buying and selling business, 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 set too low, the company may not be able to make a profit considering that it
is not only the cost of the product that is to be taken into consideration. There are
also the operating expenses, both administrative and selling, to be considered. The
selling price should be able to absorb the cost and the operating expenses and still
give a margin for the company to earn profit. Mariano, (2016)

Let us define some terminologies that we may encounter as we go further in

this lesson.

Business is the activity of making, buying or selling goods or providing

services in exchange for money. Malang, et. al. (2016)

Cost Price is the price that a company or store must pay for the goods it is
going to sell. It is the price that has to be spent to produce goods or services before
any profit is added. Paredes, et. al. (2016)

Operating Cost is the price (per unit) incurred relative to the production and
sale of a commodity. Paredes, et. al. (2016)

Selling Price or the retail price (tag price) is the amount at which the retailer
sells the goods to the customer. Malang, et. al. (2016

Profit is the money earned after the cost price and the operating costs are
accounted for after the sale of a commodity. Paredes, et. al. (2016)

Mark-Up is the difference between the selling price and the cost price
sometimes referred to as MARGIN or GROSS PROFIT. Paredes, et. al. (2016)

Markdown is a reduction in the selling price of an item. Lopez, et. al. (2016)

Mark-On is when the price of a retail product increases soon after another
increase. It is usually occurring during peak seasons or especial holidays. Lopez, et.
al. (2016)

Mark-up Rate
If we want to compute for the rate of mark-up, we can either base it on the
cost or on the selling price. When mark-up is expressed as a percentage of the cost
or selling price, we call it the rate of mark-up

Formula for the rate of mark-up based on cost:

𝑴𝑼
𝑴𝑼𝑪 (%) =
𝑪

𝑴𝑼 = 𝑴𝑼𝑪 (%) 𝒙 𝑪

𝑴𝑼
𝑪=
𝑴𝑼𝑪 (%)

3
 Where:
𝑴𝑼𝑪 (%) = 𝑴𝒂𝒓𝒌 − 𝑼𝒑 𝑹𝒂𝒕𝒆 𝑩𝒂𝒔𝒆𝒅 𝒐𝒏 𝑪𝒐𝒔𝒕
𝑴𝑼 = 𝑴𝒂𝒓𝒌 − 𝑼𝒑
𝑪 = 𝑪𝒐𝒔𝒕 𝑷𝒓𝒊𝒄𝒆

Formula for the rate of mark-up based on selling price:

𝑴𝑼
𝑴𝑼𝑺 (%) =
𝑺

𝑴𝑼 = 𝑴𝑼𝑺 (%) 𝒙 𝑺

𝑴𝑼
𝑺=
𝑴𝑼𝑺 (%)
Where:
𝑴𝑼𝑺 (%) = 𝑴𝒂𝒓𝒌 − 𝑼𝒑 𝑹𝒂𝒕𝒆 𝑩𝒂𝒔𝒆𝒅 𝒐𝒏 𝑺𝒆𝒍𝒍𝒊𝒏𝒈 𝑷𝒓𝒊𝒄𝒆
𝑴𝑼 = 𝑴𝒂𝒓𝒌 − 𝑼𝒑
𝑺 = 𝑺𝒆𝒍𝒍𝒊𝒏𝒈 𝑷𝒓𝒊𝒄𝒆

To cover the expenses or overhead of running the business, a mark-up is put on

products. The sum of the cost and mark-up determines the selling price

To compute for Selling price and mark-up, we have the following formulas:

𝑺 = 𝑪 + 𝑴𝑼
𝑴𝑼 = 𝑺 − 𝑪
𝑪 = 𝑺 − 𝑴𝑼

Where:
𝑺 = 𝑺𝒆𝒍𝒍𝒊𝒏𝒈 𝑷𝒓𝒊𝒄𝒆
𝑪 = 𝑪𝒐𝒔𝒕 𝑷𝒓𝒊𝒄𝒆
𝑴𝑼 = 𝑴𝒂𝒓𝒌 − 𝑼𝒑

Mark-up can also be defined as the sum of expenses and profits.

𝑴𝑼 = 𝑬 + 𝑷

Where:
𝑴𝑼 = 𝑴𝒂𝒓𝒌 − 𝑼𝒑
𝑬 = 𝑬𝒙𝒑𝒆𝒏𝒔𝒆𝒔
𝑷 = 𝑷𝒓𝒐𝒇𝒊𝒕

Given all the formulas above, we can solve for the selling price as:

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

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Mark-Up on Cost
When the Mark-Up is a percentage of the cost, the cost becomes the base or
the 100%. For instance, a commodity had a 20% Mark-Up on cost; the formula would
be:
𝑆𝑒𝑙𝑙𝑖𝑛𝑔 𝑃𝑟𝑖𝑐𝑒 = 𝐶𝑜𝑠𝑡 + 𝑀𝑎𝑟𝑘 − 𝑈𝑝
120% = 100% + 20%
It means that the Selling Price is 120% of the cost. The Mark-Up is the
percentage amount, the Mark-Up rate is the rate, and the cost is the base. With this,
the following formulas can also be applied in dealing with mark-up on cost problems.
𝑴𝑼 𝑴𝑼
𝑴𝑼𝑪 (%) = ; 𝑴𝑼 = 𝑪 𝒙 𝑴𝑼𝑪 (%); 𝑪=
𝑪 𝑴𝑼𝑪 (%)
Where:
𝑴𝑼 = 𝑴𝒂𝒓𝒌 − 𝑼𝒑
𝑴𝑼𝑪 (%) = 𝑴𝒂𝒓𝒌 − 𝑼𝒑 𝑹𝒂𝒕𝒆 𝒐𝒏 𝑪𝒐𝒔𝒕
𝑪 = 𝑪𝒐𝒔𝒕

Example 1: Find the mark-up and selling price of a new pair of shoes that cost
Php3,500 if there is a 25% mark-up on cost.

Solution:
First Step: Given: 𝐶 = 𝑃ℎ𝑃3,500; 𝑅 = 25%
Identify the given and unknown in the Find: MU; S
problem.

Second Step: 𝑀𝑈 = 𝑀𝑈𝐶 (%) 𝑥 𝐶

Compute for the Mark-up = 0.25 𝑥 𝑃ℎ𝑃3,500
(Remember to change the percent to = 𝑃ℎ𝑃875
decimal before multiplying or dividing)

Third Step: 𝑆 = 𝐶 + 𝑀𝑈
Compute for the Selling price = 𝑃ℎ𝑃3,500 + 𝑃ℎ𝑃875
= 𝑃ℎ𝑃4,375

Finalize your answer Therefore, the mark-Up is PhP875 and

the Selling Price is PhP4,375.

Alternative Solution:
The selling price can also be solved by multiplying the Cost by 125%.
100% is the Original Price + 25% is the value of Mark-Up.
Such that, 1.25 x PhP3,500 = PhP4,375

Example 2: Find the cost and the selling price of a digital camera, if the mark-up is
PhP2,300 and the mark-up rate is 20% on the cost.

Solution:
First Step: 𝐺𝑖𝑣𝑒𝑛: 𝑀𝑈 = 𝑃ℎ𝑃2,300; 𝑀𝑈𝐶 (%) = 20%
Identify the given and unknown in the 𝐹𝑖𝑛𝑑: 𝐶; 𝑆
problem.

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 Second Step: 𝑀𝑈
𝐶=
Compute for the Cost 𝑀𝑈𝐶 (%)
(Remember to change the percent to 𝑃ℎ𝑃2,300
=
decimal before multiplying or dividing) 0.20
= 𝑃ℎ𝑃11,500

Third Step: 𝑆 = 𝐶 + 𝑀𝑈
Compute for the Selling price = 𝑃ℎ𝑃11,500 + 𝑃ℎ2,300
= 𝑃ℎ𝑃13,800

Finalize your answer Therefore, the cost of the digital camera

is PhP11,500 and the Selling Price is
PhP13,800.

Mark-Up on Selling Price

When the Mark-Up is based on the Selling Price, the Selling Price becomes the
base or 100%. Suppose there is a 15% Mark-Up on the Selling Price, the following
formula should be considered.
𝑆𝑒𝑙𝑙𝑖𝑛𝑔 𝑃𝑟𝑖𝑐𝑒 = 𝐶𝑜𝑠𝑡 + 𝑀𝑎𝑟𝑘 − 𝑈𝑝
100% = 85% + 15%
In dealing with problems involving Mark-Up on Selling Price the following
formulas can also be applied.
𝑴𝑼 𝑴𝑼
𝑴𝑼𝑺 (%) = ; 𝑴𝑼 = 𝑺 𝒙 𝑴𝑼𝑺 (%); 𝑺=
𝑺 𝑴𝑼𝑺 (%)
Where:
𝑴𝑼 = 𝑴𝒂𝒓𝒌 − 𝑼𝒑
𝑴𝑼𝑺 (%) = 𝑴𝒂𝒓𝒌 − 𝑼𝒑 𝑹𝒂𝒕𝒆 𝒐𝒏 𝑺𝒆𝒍𝒍𝒊𝒏𝒈 𝑷𝒓𝒊𝒄𝒆
𝑺 = 𝑺𝒆𝒍𝒍𝒊𝒏𝒈 𝑷𝒓𝒊𝒄𝒆

Example 1: A drug store sells a face shield at a mark-up of 20% on the selling price.
If the mark-up on a face shield is PhP25, how much is the selling price and the cost
of the face shield?

Solution:
First Step: 𝐺𝑖𝑣𝑒𝑛: 𝑀𝑈 = 𝑃ℎ𝑃25; 𝑀𝑈𝑆 (%) = 20%
Identify the given and unknown in the 𝐹𝑖𝑛𝑑: 𝑆; 𝐶
problem.

Second Step: 𝑀𝑈
𝑆=
Compute for the Selling Price 𝑀𝑈𝑆 (%)
(Remember to change the percent to 𝑃ℎ𝑃25
=
decimal before multiplying or dividing) 0.20
= 𝑃ℎ𝑃125

Third Step: 𝐶 = 𝑆 − 𝑀𝑈
Compute for the Cost = 𝑃ℎ𝑃125 − 𝑃ℎ25
= 𝑃ℎ𝑃100

Finalize your answer Therefore, the Selling Price of the face

shield is PhP125 and it cost PhP100
each.

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Conversion of Mark-up Rate based on Cost to Mark-up Rate Based on Selling
Price and vice versa.
If you know the mark-up rate on the cost, you can find the corresponding
mark-up rate on the selling price and vice versa. The mark-up rate on the cost will
always be greater than the mark-up rate on the selling price. If you are given the
mark-up rate on the cost and you want to convert it to the mark-up rate on the
selling price, the following formula should be used:

𝑴𝑼𝑪 (%)
𝑴𝑼𝑺 (%) =
𝟏 + 𝑴𝑼𝑪 (%)

Where:

𝑴𝑼𝑺 (%) = 𝑴𝒂𝒓𝒌 − 𝑼𝒑 𝑹𝒂𝒕𝒆 𝒐𝒏 𝑺𝒆𝒍𝒍𝒊𝒏𝒈 𝑷𝒓𝒊𝒄𝒆

𝑴𝑼𝑪 (%) = 𝑴𝒂𝒓𝒌 − 𝑼𝒑 𝑹𝒂𝒕𝒆 𝒐𝒏 𝑪𝒐𝒔𝒕

Example: The mark-up rate on the cost is 35%, if the selling price of an item is
PhP200, how much is the mark-up?

Solution:
First Step: 𝐺𝑖𝑣𝑒𝑛: 𝑀𝑈𝐶 (%) = 35%
Identify the given and unknown in the 𝑆 = 𝑃ℎ𝑃200
problem. 𝐹𝑖𝑛𝑑: 𝑀𝑈
Second Step: 𝑀𝑈𝐶 (%)
𝑴𝑼𝑺 (%) =
Compute for the Mark-Up Rate on 1 + 𝑀𝑈𝐶 (%)
Selling Price
(Since you are given the Selling Price, it 0.35
=
is necessary to convert the mark-Up 1 + .0.35
= 0.2593 (rounded to 4 decimal places)
Rate on Cost to Mark-Up Rate on = 25.93% (converted to percent)
Selling Price)

Third Step: 𝑀𝑈 = 𝑅 𝑥 𝑆
Compute for the mark-Up = 0.2593 𝑥 𝑃ℎ𝑃200
(Remember to change the percent to = 𝑃ℎ𝑃51.86
decimal before multiplying or dividing)
Finalize your answer Therefore, the Mark-Up Rate on Selling
Price is 25.9% and the Mark-Up amount
is PhP51.86

If you are given the mark-up rate on selling price, you can solve the equivalent
mark-up rate on the cost using the formula:

𝑴𝑼𝑺 (%)
𝑴𝑼𝑪 (%) =
𝟏 − 𝑴𝑼𝑺 (%)

Where:

𝑴𝑼𝑪 (%) = 𝑴𝒂𝒓𝒌 − 𝑼𝒑 𝑹𝒂𝒕𝒆 𝒐𝒏 𝑪𝒐𝒔𝒕

𝑴𝑼𝑺 (%) = 𝑴𝒂𝒓𝒌 − 𝑼𝒑 𝑹𝒂𝒕𝒆 𝒐𝒏 𝑺𝒆𝒍𝒍𝒊𝒏𝒈 𝑷𝒓𝒊𝒄𝒆

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Example 1: Convert a mark-up rate of 28% based on the selling price to a mark-up
rate based on cost.

Solution:
First Step: 𝐺𝑖𝑣𝑒𝑛: 𝑀𝑈𝑆 (%) = 28%
Identify the given and unknown in the 𝐹𝑖𝑛𝑑: 𝑀𝑈𝐶 (%)
problem.
Second Step: 𝑀𝑈𝑆 (%)
𝑴𝑼𝐶 (%) =
Compute for the Mark-Up Rate on Cost 1 − 𝑀𝑈𝑆 (%)
using the formula for Mark-Up Rate on
0.28
Cost. =
1 − 0.28
0.28
=
0.72
= 0.3889 (rounded to 4 decimal places)
= 38.89% (converted to percent)

Finalize your answer Therefore, a mark-up rate of 28% based

on the selling price is equivalent to
38.89% mark-up rate based on the
cost.

This can be proved by considering a product that sells for PhP100. A mark-up
of 25% on the selling price is 28% x PhP100 = 0.28 x PhP100 = PhP28. Now the cost
of the item is PhP100 – PhP28 = PhP72. A 38.9% mark-up on cost is 38.9% x PhP72
= 0.389 x PhP72 = PhP28.
Observe that the mark-up amount of PhP28 is the same in both cases. Having
a knowledge on how to convert from one mark-up to the other is helpful when dealing
with problem involving the selling price and the mark-up rate based on the cost or
involving the cost and the mark-up rate based on the selling price. All you have to
do to deal with this type of problems is to convert the mark-up rate to the other base
and solve as shown in the two previous examples. Bluman, (2006)

Markdown
Markdown is a reduction in the selling price of an item. It may be done
temporarily or permanently. A temporary markdown is a reduction in the selling price
of an item to encourage consumers to increase their demand on the said product.
On the other hand, permanent markdown is implemented by companies to remove a
“poor-sales” product from their inventory. Generally, the purpose of markdown is
either to generate sales or to clear inventory. Lopez, et, al. (2016)
Most companies implement markdowns by giving discount or retail discount
to slow moving items.
Remember that rates of markdowns are always calculated based on the selling
price. To compute for the markdown the following formulas should be used:

𝑴𝑫 = 𝑶𝑺 𝒙 𝑴𝑫𝑹

𝑴𝑫
𝑶𝑺 =
𝑴𝑫𝑹

𝑴𝑫
𝑴𝑫𝑹 =
𝑶𝑺

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 Where:
𝑴𝑫 = 𝑴𝒂𝒓𝒌𝒅𝒐𝒘𝒏
𝑶𝑺 = 𝑶𝒍𝒅 𝑺𝒆𝒍𝒍𝒊𝒏𝒈 𝑷𝒓𝒊𝒄𝒆
𝑴𝑫𝑹 = 𝑴𝒂𝒓𝒌𝒅𝒐𝒘𝒏 𝑹𝒂𝒕𝒆

𝑴𝑫 = 𝑶𝑺 − 𝑵𝑺

Where:
𝑴𝑫 = 𝑴𝒂𝒓𝒌𝒅𝒐𝒘𝒏
𝑶𝑺 = 𝑶𝒍𝒅 𝑺𝒆𝒍𝒍𝒊𝒏𝒈 𝑷𝒓𝒊𝒄𝒆
𝑵𝑺 = 𝑵𝒆𝒘 𝑺𝒆𝒍𝒍𝒊𝒏𝒈 𝑷𝒓𝒊𝒄𝒆

Example 1: A boutique originally priced a pair of pants at PhP899.50 and offered

for sale at PhP549.50. Find the markdown and the percent of the markdown.

Solution:
First Step: 𝐺𝑖𝑣𝑒𝑛: 𝑂𝑆 = 𝑃ℎ𝑃899.50
Identify the given and unknown in the 𝑁𝑆 = 𝑃ℎ𝑃549.50
problem. Find: 𝑀𝐷; 𝑀𝐷𝑅

Second Step: 𝑀𝐷 = 𝑂𝑆 − 𝑁𝑆
Compute for the Markdown = 𝑃ℎ𝑃899.50 − 𝑃ℎ𝑃649.50
= 𝑃ℎ𝑃250

Third Step: 𝑀𝐷
𝑀𝐷𝑅 =
Compute for the Markdown Rate 𝑂𝑆

𝑃ℎ𝑃250
=
𝑃ℎ𝑃899.50
= 0.2779 (rounded to 4 decimal places)
= 27.79% (Converted to percent)

Finalize your answer Therefore, the markdown amount is

PhP250 and the markdown rate based
on the old selling price is 27.79%.

Mark-On
When there is such a high demand for a product or commodity and that
buyers can easily afford the selling price the sellers have pegged. Some businesses
will want to take advantage of this peak season and thus, increase the prices already
pegged for their commodities. This is what we called Mark-On. Paredes, et. al. (2016)

Mark-On usually happens due to the following reasons: a calamity has hit the
source of a raw material or commodity therefore affecting its supply; seasonal

9
demands (Christmas items, Valentines, and others); special occasion is being
celebrated (commemorative, death anniversary, and others) Paredes, et. al. (2016)

Formulas:
𝑴𝑶 = 𝑷𝑺 − 𝑹𝑺
Where:
𝑴𝑶 = 𝑴𝒂𝒓𝒌 − 𝑶𝒏
𝑷𝑺 = 𝑷𝒆𝒂𝒌 𝑺𝒆𝒍𝒍𝒊𝒏𝒈 𝑷𝒓𝒊𝒄𝒆
𝑹𝑺 = 𝑹𝒆𝒈𝒖𝒍𝒂𝒓 𝑺𝒆𝒍𝒍𝒊𝒏𝒈 𝑷𝒓𝒊𝒄𝒆

𝑴𝑶 = 𝑹𝑺 𝒙 𝑴𝑶𝑹

𝑴𝑫
𝑹𝑺 =
𝑴𝑶𝑹

𝑴𝑶
𝑴𝑶𝑹 =
𝑹𝑺
Where:
𝑴𝑶 = 𝑴𝒂𝒓𝒌 − 𝑶𝒏
𝑹𝑺 = 𝑹𝒆𝒈𝒖𝒍𝒂𝒓 𝑺𝒆𝒍𝒍𝒊𝒏𝒈 𝑷𝒓𝒊𝒄𝒆
𝑴𝑶𝑹 = 𝑴𝒂𝒓𝒌 − 𝑶𝒏 𝑹𝒂𝒕𝒆

Example: Mercedes owns a candle store. She knows that many customers will buy
candle a week before All Saints Day. The cost of the most in demand candle is Php75.
A week before All Saints Day, the rate of markup based on the selling price of candle
is 15%. Mercedes knew that even if she increases the selling price of candle, people
will still buy it. So, she decided to put a mark-on of 7% to its selling price.
a. How much is the mark-up?
b. How much is the actual selling price?
c. How much is the additional mark-on?
d. How much is the peak selling price after additional mark-on?

Solution:
First Step: 𝐺𝑖𝑣𝑒𝑛: 𝐶 = 𝑃ℎ𝑃75
Identify the given and unknown in the 𝑀𝑈𝑆 (%) = 15%; 𝑀𝑂𝑅 = 7%
problem. 𝐹𝑖𝑛𝑑: 𝑀𝑈; 𝑆
𝑀𝑂; 𝑁𝑆
Second Step: 𝑀𝑈𝑆 (%)
𝑀𝑈𝐶 (%) =
Convert mark-up rate based on selling 1 − 𝑀𝑈𝑆 (%)
price to mark-up rate based on cost. 0.15
=
1 − 0.15
= 0.1765 (rounded to 4 decimal places)
= 17.65% (converted to percent)
Third Step: 𝑀𝑈 = 𝐶 𝑥 𝑀𝑈𝐶 (%)
Compute for the Mark-up = 𝑃ℎ𝑃75 𝑥 17.65%
= 𝑃ℎ𝑃75 𝑥 0.1765(convert percent to decimal)
= 𝑃ℎ𝑃13.24 (rounded to 2 decimal places)

10
Fourth Step: 𝑆 = 𝐶 + 𝑀𝑈
Compute for the Selling Price = 𝑃ℎ𝑃75 + 𝑃ℎ𝑃13.24
= 𝑃ℎ𝑃88.24

Fifth Step: 𝑀𝑂 = 𝑆 𝑥 𝑀𝑂𝑅

Compute for the Mark-On = 𝑃ℎ𝑃88.24 𝑥 7%
= 𝑃ℎ𝑃88,24 𝑥 0,07 (convert percent to decimal)
= 𝑃ℎ𝑃6.18 (rounded to 2 decimal places)
Sixth Step: 𝑴𝑶 = 𝑷𝑺 − 𝑹𝑺
Compute for the New Selling Price or 𝑃𝑆 = 𝑀𝑂 + 𝑅𝑆
Peak selling Price = 𝑃ℎ𝑃6.18 + 𝑃ℎ𝑃88.24
= 𝑃ℎ𝑃94.42 𝑜𝑟 𝑃ℎ𝑃94.40
Finalize your answer Therefore, the mark-up is PhP13.24,
the regular selling price is PhP88.24,
the mark-on based on the regular
selling price is PhP6.18 and the peak
selling price after the mark-on was
added is PhP94.40

ACTIVITY I.

Try solving the following problems. Show your solution using a separate sheet of
paper.
A. Convert mark-up rate based on selling price to mark-up rate based on cost and
vice versa.

Mark-Up Rate Based on Mark-Up Rate Based on

Selling Price Cost
1. 45%
2. 30%
3. 15%
4. 55%
5. 60.5%

B. Complete the table below by solving the missing item involving mark-up.

RATE
SELLING COST MARK-UP RATE BASED BASED ON
PRICE ON COST SELLING
PRICE
1. Ph80 Ph30
2. PhP240 PhP60
3. PhP2,800 PPhP700

C. Complete the table below by solving the missing item involving markdown.

OLD SELLING NEW SELLING MARKDOWN MARKDOWN

PRICE PRICE RATE

11
 1. PhP750 PhP125
2. PhP395 PhP75
3. PhP2,455 12%

D. Complete the information in the table below involving mark-on.

PEAK SELLING REGULAR

PRICE SELLING PRICE MARK-ON MARK-ON RATE
1. PhP450 PhP380
2. PhP150 15%
3. PhP640 PhP360

E. Solve the given problem completely.

1. A washing machine has a tag price of PhP11,000 and was marked down
by 25% during the year-end clearance sale in a certain department store.
After the sale, it was mark-on by 20%. Find the selling price after the
markdown and mark-on.
2. New Sunshine School Supply anticipates that people will buy notebooks
several days before the start of classes. The cost of the notebook in the store
is PhP28. Ten days before the start of classes, the store’s rate of mark-up
based on selling price is 5%. Five days after the opening of classes, they
decided to put an additional mark-on of 3% to its selling price.
a. What is the mark-up?
b. What is the selling price?
c. What is the additional mark-on?
d. How much is the peak selling price after additional mark-on?

References

Bluman, Allan G., (2006) Business Math Demystified A Self Teaching Guide. pp.
91-115. United States of America. McGraw-Hill Companies, Inc.

Lopez, Brian Roy C., et.al. (2016). Business Math. Vibal Group, Inc. Quezon City,
Philippines.

Malang, Paulino P., et.al. (2016). Business Mathematics. St. Andrew Publishing
House. Bulacan, Philippines.

Mariano, Norma D.L. (2016). Business Mathematics. Rex Book Store. Manila,
Philippines.

Paredes, Lorna I., et. al. (2016). Teaching Guide for Senior High School, Business
Mathematics. Commission on Higher Education.

12
 Lesson Markup vs Margin;
Gross Margin in Sales;
6 Single Trade Discount and Discount
Series
Confusion on certain concepts always bother us. In Business Mathematics,
three sets of concepts give such confusions, thus, in our sixth week of the first
quarter, we are going differentiate markup and margin, describe how gross margin
is used in sales, and differentiate and compute single trade discount and discount
series.

As a review, let us answer the following exercises.

1. What percent of 1150 is 550?

2. Five hundred eight is 42% of what number?
3. What is 35% of 750?
4. What percent of 45 is 105?
5. Eight hundred seventy is 15% of what number?

These are exercises involving percentage, which had been discussed

previously. Let’s have the solutions. As always, identify the given first, then state
what needs to be found, and then show the solution afterwards.

1. Given: B = 1150 (clue, the word ‘of’)

P = 550
Find: r (clue, the word ‘percent’)
𝑃 550
Solution: 𝑟 = 𝑥 100% = 𝑥 100% = 47.83%
𝐵 1150
2. Given: P = 508
r = 42% = 0.42
Find: B
𝑃 508
Solution: 𝐵 = = = 1,209.52
𝑟 0.42
3. Given: r = 35% = 0.35
B = 750
Find: P
Solution: P = B•r = (750)(0.35) = 262.50
4. Given: B = 45
P = 105
Find: r
105
Solution: 𝑟 = 𝑥 100% = 233.33%
45
5. Given: P = 870
r = 15% = 0.15
Find: B
𝑃 870
Solution: 𝐵 = = = 5,800
𝑟 0.15
Most of our computations are based on the concept of percentage where we
take a number as part of another number based on the application of the rate.
Markup, margin, and discounts are also applications of the computations of
percentage as what we will see in the next lesson.

13
 What Science Says About Discounts, Promotions and Free Offers
In 1887, Coca-Cola distributed the first-ever coupon. Little did the company realize how important the concept
would be in shaping the future of commerce.

With the Coca-Cola voucher, recipients could redeem one free glass of Coke at any dispensary. Coke, which was
introduced a year earlier, benefitted from this marketing strategy, as it encouraged both consumer and vendor
adoption.

According to Coupon Sherpa, “Between 1894 and 1913, an estimated one-in-nine Americans had received a free
Coca-Cola, for a total of 8,500,000 free drinks. By 1895, Coca-Cola was being served in every state.”

Coke had solidified its brand as a household name. Today, Coke is the world’s best-selling carbonated beverage,
thanks to more than a century of clever marketing strategies, including coupons, deals, and markdowns.

Now nearly every brand and retailer uses discounts or other promotions to grow their businesses too. Companies
that understand the psychology behind special offers create a favorable brand image, deliver happiness to new
and returning customers, and boost long-term profitability and sales.
Source: https://topten.ph/2014/08/30/top-10-best-rags-riches-pinoy-stories/
Source: https://cm-commerce.com/academy/what-science-says-about-discounts-promotions-and-free-offers/

Buying and selling entails more serious weighing of pros and cons
particularly during times when resources are scarcer than ever. Both businesses
and customers should make sure that they are in a win-win situation, that is, for
businesses to still earn while offering discounts and for customers to feel satisfied
with having been given the needed discounts to be able to spend lesser than they
have expected/budgeted.

If you get the opportunity to have business, will you

offer discount promotions? If you are the buyer, which will you
choose, single trade discount or discount series?

Before a business entity can offer promotional activities, it must look into its
books first regarding its status of earning. So, we talk about mark-up and margin
first.
In the previous lesson about mark-on, markup and mark-down, it was
stated that markup, which we also call profit or margin, is the amount that is
added to the cost of a product to come up with the selling price, (Mariano, 2016).
But there is a difference between markup and margin.

Example 1.
If a product needs PhP200 to manufacture it, and then the company sells it
at PhP275 compute for the markup and the margin.
A. The markup is computed by:
Markup = Selling Price – Cost of Goods
= PhP275 – PhP200
Markup = PhP75
We are safe to say that the markup is PhP75 and it is taken from the
difference between the selling price and the cost of goods.
When we compute for the markup rate in this example and use the cost of
goods as basis of the markup, we use the following formula:
𝑀𝑎𝑟𝑘𝑢𝑝 𝑎𝑚𝑜𝑢𝑛𝑡
Markup Rate = 𝑥100%
𝑃𝑟𝑜𝑑𝑢𝑐𝑡 𝑐𝑜𝑠𝑡
𝑆𝑒𝑙𝑙𝑖𝑛𝑔 𝑃𝑟𝑖𝑐𝑒−𝐶𝑜𝑠𝑡 𝑜𝑓 𝐺𝑜𝑜𝑑𝑠
Markup Rate = 𝑥 100%
𝐶𝑜𝑠𝑡 𝑜𝑓 𝐺𝑜𝑜𝑑𝑠
(This is so because Markup amount is equal to selling price minus
cost of goods.)
Applying the formula in our example,

14
 𝑀𝑎𝑟𝑘𝑢𝑝 𝑎𝑚𝑜𝑢𝑛𝑡
Markup Rate = 𝑥100%
𝑃𝑟𝑜𝑑𝑢𝑐𝑡 𝑐𝑜𝑠𝑡
𝑃ℎ𝑃75
= 𝑥100%
𝑃ℎ𝑃200
Markup Rate = 37.5%
(Note: markup rate is a computation applying the formula for rate in
𝑝𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒, 𝑃
percentage problems where rate, r = 𝑥100%. The markup amount
𝐵𝑎𝑠𝑒,𝐵
corresponds to the percentage and the product cost corresponds to the base.)
We call this Markup rate which was computed by taking the markup
amount divided by the cost of goods as the markup rate based on cost, (Mariano
2016).
B. But there is another image of profit other than the markup. And we call
that other image of profit as margin. According to Mariano (2016), margin or gross
margin or profit is also selling price minus cost of goods. In the example above, our
margin is PhP275 – PhP200 = PhP75. The value of markup is the same as the
value of our margin. But, if we now take our Markup Rate with the selling price as
basis, like the following:
𝑀𝑎𝑟𝑘𝑢𝑝 𝑎𝑚𝑜𝑢𝑛𝑡
Markup Rate = 𝑥100% or
𝑆𝑒𝑙𝑙𝑖𝑛𝑔 𝑃𝑟𝑖𝑐𝑒
𝑆𝑒𝑙𝑙𝑖𝑛𝑔 𝑃𝑟𝑖𝑐𝑒−𝑃𝑟𝑜𝑑𝑢𝑐𝑡 𝐶𝑜𝑠𝑡
Markup Rate = 𝑥100%
𝑆𝑒𝑙𝑙𝑖𝑛𝑔 𝑃𝑟𝑖𝑐𝑒
Then substituting the values, we have:
𝑃ℎ𝑃275−𝑃ℎ𝑃200
Markup Rate = 𝑥100%
𝑃ℎ𝑃275
Markup Rate = 27.27%
This markup rate is now which is based on the selling price is called
markup rate based on selling price, (Mariano, 2016).
We may conclude then that markup is taking the profit into account based
on cost while margin is looking into profit from the selling price.
Summarizing the above values, if our selling price is Php275 and our cost of
goods is PhP200, the profit of PhP75 if called markup, taken as 37.5%, is markup
based on cost, while the same value of PhP75, now called margin taken as 27.27%,
is markup based on selling price.

Example 2.
An auto parts manufacturer sells fan belts to its distributors for PhP547.50.
Typical distributor markups are 20% and typical gas station markups are 40%.
How much would you have to pay for a fan belt if you purchased it from a gas
station? Please round your answers to the nearest centavo before continuing.
In solving this, we start with identifying our given values, then we state what
is needed to be solved using ‘Find:’, and then solve.
Given: Cost = PhP547.50
Distributor Markup = 20%
Gas station Markup = 40%
Find: Selling Price (Gas Station Price)
Solution:
Since the fan belt that I need to buy goes through the distributor before the
gas station, I need no know first the price that the distributor will charge.
a. Distributor Price
Distributor Price = Cost + Markup (Markup is 20% of Cost)
= Cost + 20%(Cost) (Convert % to decimal)
= Cost + 0.20Cost
= Cost (1+0.2) = Cost (1.2)
= PhP547.5(1.2)
= PhP657

15
 b. Gas Station Price
Gas Station Price = Cost + Markup (Cost is Distributor’s Price)
= Distributor Price + 40% (Distributor Price)
= Distributor Price +0.40Distributor Price
= Distributor Price (1.4)
= PhP657(1.4)
= PhP919.80
I will have to pay PhP919.80 for a fan belt at a gas station.

Use of Gross Margin to Sales

As stated earlier, our margin is also termed as gross margin. Now, what
does a gross margin have to do with sales? According to Mariano (2016), gross
margin is also markup based on sales or selling price. In our example no.1, the
markup based on selling price was computed to be 27.27%. This means that for
every peso of sales, a company earns 27 centavos as profit. These 27 centavos may
be used for other expenditures (other than the cost of goods). A company that has
a high selling price but with low cost of goods will have a higher gross margin.
Having a higher gross margin would make the company have more funds for other
expenses.

Example 3.
Imagine that a business collects PhP1,000,000 in sales. Its cost of goods
consists of the PhP200,000 it spends on manufacturing supplies, plus the
PhP80,000 it pays in labor costs. What is the company’s gross margin?
Given: Sales = PhP1,000,000
Cost of Goods = PhP200,000
Labor Costs = PhP80,000
Find: Gross Margin
Solution:
Gross Margin = Sales – Cost of Goods
= PhP1,000,000 – PhP200,000
= PhP800,000
In percent, %
𝑆𝑎𝑙𝑒𝑠−𝐶𝑜𝑠𝑡 𝑜𝑓 𝐺𝑜𝑜𝑑𝑠
Gross Margin = 𝑥 100%
𝑆𝑎𝑙𝑒𝑠
800,000
Gross Margin = 𝑥100%
1,000,000
= 80%
This gross margin of 80% means that for every peso sold, the
company has 80 centavos as funds for other expenses like the labor costs,
paying debts, interest fees, and dividends for shareholders.

Single Trade Discount vs Discount Series

It is inherent among customers to get the best deal in every transaction.
That is why, they do their best to look for lower prices. But sometimes, the quality
of the commodity is just as low as the price.
As consumers, if we are to look for low prices, we often look for
announcements or notices of sales promotions particularly discounts. As such, we
need to know the basic computation on discounts or trade discounts.
According to Lopez (2016), a trade discount or discount is the amount
deducted from the list price of a commodity. This reduction is granted by the seller
to the buyer as volume discounts for bulk purchases, dealer’s or distributor’s
discounts or special discounts at the discretion of the seller. Single trade discount
and discount series are the two types of trade discount.

16
 The computation for discount is also an application of the computation of
percentage. The percentage corresponds to the discount; the base corresponds to
the selling price or list price or original price and the discount rate corresponds to
the rate. Hence, the formulas:

Percentage: P = (B)(r) Discount: D = (SP)(DR)

Where: P = Percentage D = Discount
B = Base SP = Selling Price
r = rate DR = Discount Rate

Other formulas for us to use:

𝐷
SP =
𝐷𝑅
𝐷
DR = 𝑥100%
𝑆𝑃
Net Invoice Price or Discounted Price or Sale Price:
(difference between the selling price and the discount)
NIP = SP - D

Single Trade Discount

According to eNotes Editorial (2010), a single trade discount is a one-time
benefit extended by a seller to the buyer when the latter makes a purchase meeting
certain conditions required for the discount. It is simply the markdown that was
mentioned in our previous lesson.
The formulas used in the computation are exactly the ones mentioned above,
for discounts/markdowns.

Example 1.
Compute the discount for an item with a list price of PhP2,250 that is given
a 15% discount. What is its net invoice price?
In solving these kinds of problems, we once again start with our ‘Given’, then
state what we need to ‘Find’ and show the ‘Solution’.
Given: List Price or Selling Price (SP) = PhP2,250
Discount Rate (DR) = 15% = 0.15 (convert this to decimal)
Find: a. Discount
b. Net Invoice Price
Solution:
a. Discount:
D = (SP)(DR)
Substituting the values:
D = (PhP2,250)(0.15)
D = PhP337.50
b. Net Invoice Price, NIP
NIP = SP – D
= PhP2,250 – PhP337.50
NIP = PhP1,912.50
The 15% discount for an item worth PhP2,250 is PhP337.50 and the net
invoice price is PhP1,912.50.

If you have noticed, when the problem requires of us to computed for the net
invoice price, we compute it by going through taking the discount first and then
subtract the discount from the original selling price. There is another way by
which we can solve for the net invoice price directly from the given discount rate
and original selling price.

17
 Let us derive the formula.
We have given that D = (SP)(DR) let this be equation 1
NIP = SP – D let this be equation 2
Let us substitute equation 1 into the equation 2
NIP = SP – (SP)(DR)
Let us factor out since SP is common to both terms
NIP = SP(1-DR)
Therefore, we may use NIP = SP(1-DR) to compute for our net invoice price
directly from the given selling price and discount rate.
Let us note that the quantity (1-DR) is the complement of DR. According to
https://www.initiatewebdevelopment.com/Business-math/complement-
method.html (2019), the complement of a discount rate is the difference between
100% and the discount rate, and this is the net price factor or the rate that is
used to compute for the net price after a discount. Thus, our formula for net
invoice price or discounted price now becomes: NIP = (SP)(NPF). We call this
method of computing net invoice price using the net price factor as the
Complement Method, (https://www.initiatewebdevelopment.com/Business-
math/complement-method.html, 2019).

Example 2.
Let us use the values in Example 1 to show if the net invoice price will be the
same using the Complement Method:
Given: Selling Price (SP) = PhP2,250
Discount Rate (DR) = 15%
Find: NIP
Solution:
NIP = (SP)(NPF)
= (SP)(1-DR)
= (PhP2,250)(1-0.15) -always convert percent to decimal
NIP = PhP1,912.50
Thus, it is easier to compute the net invoice price or discounted price using
the Complement Method.

Example 3.
Lloyd bought a sala set initially worth Php22,000. Upon negotiating with the
owner who happened to be his high school classmate, Lloyd was given an 18%
discount on the item. Compute for a. discount; b. net invoice price using the
discount and net invoice price using the complement method.
We start with
Given: SP = PhP22,000
DR = 18% = 0.18, converting it to decimal
Find: a. Discount, D
b. NIP using the discount
c. NIP using complement method
Solution:
a. D = (SP)(DR)
Substituting the values, we have
D = (PhP22,000)(0.18)
D = PhP3,960
b. NIP = SP – D
Substituting the values, we have
= (PhP22,000) – PhP3,960
= PhP18,040
c. NIP = SP(1-DR)

18
 = (Php22,000)(1-0.18) = (22,000)(0.82)
= PhP18,040

What we have discussed about single trade discounts, net invoice price and
complement method are not just going to stay where they are. We are going to use
them when we talk of discount series. According to Lopez (2016), discount series
is a type of discount that is given to buyers where discounts are given more than
once at different levels according to conditions agreed upon by buyer and seller.
These discount series are given to attract more customers to buy especially for bulk
purchases of products in season, (Lopez,2016).

But, before we proceed to the computations for discount series, let us first
review/practice on the following.
A. Give the complement of each discount rate.
1. 10%
2. 35%
3. 78%
4. 65%
5. 59%
In the discussion above, we said that the complement of a discount rate is
taken as the difference between 100% and the said discount rate. So, we have the
following:
1. Complement of 10% or 0.10 = 100% - 10% = 90% or 0.9
2. Complement of 35% or 0.35 = 100% - 35% = 65% or 0.65
3. Complement of 78% or 0.78 = 100% - 78% = 22% or 0.22
4. Complement of 65% or 0.65 = 100% - 65% = 35% or 0.35
5. Complement of 59% or 0.59 = 100% - 59% = 41% or 0.41

B. Complete the table below:

Discount Selling Price Discount Rate
1000 27%
318 30%
3500 9500
450 10%
675 3%
We recall that discount, D is equal to Selling Price, SP multiplied by discount
rate, DR. In symbols, we have D = (SP)(DR). And, then deriving the formulas for
𝐷 𝐷
selling price and discount rate, we have SP = and DR = . Also, we always
𝐷𝑅 𝑆𝑃
convert our percent to decimal. Thus, we have the following computations.
1. D = (SP)(DR) = (1000)(0.27) = 270
𝐷 318
2. SP = = = 1060
𝐷𝑅 0.3
𝐷 3500
3. DR = = = 36.84%
𝑆𝑃 9500
𝐷 450
4. SP = = 𝐷𝑅
= 4500
0.1
5. D = (SP)(DR) = 675(.03) = 20.25

We have recalled the above concepts to make sure that when these concepts
are used, it will be easier for us.

Let us continue with the discussion on discount series. According to

Mariano (2016), there are three methods by which the net invoice price is computed

19
from a discount series. We shall show these methods through the following
example:

Example 1.
Lorena is a marketing personnel at a waterproofing contractor. She offered a
wall waterproofing job in the amount of PhP50,000 with a discount of 25/10. What
is the final amount of her offer to the client after applying the 25/10 discount? Is
25/10 equivalent to the single discount of 35%?
Let us first identify the given values. Note that 25/10 means 25% and 10%.
Given: SP = PhP50,000
DR1 = 25% = 0.25 (Always convert percent to decimal)
DR2 = 10% = 0.10
Find: a. net invoice price
b. is 25/10 equivalent to 35%?

Solution:
a. Net Invoice Price using the three methods
Method 1.
Compute the first discount. Compute the first net invoice price by
subtracting the first discount from the original selling price. Then derive the
second discount by multiplying the second discount rate by the first net
invoice price. Subtract this second discount from the first net invoice price to
get the final net invoice price.

SP PhP50,000
First Discount (50,000)(0.25) - 12,500
First Net Invoice Price 37,500
Second Discount (37,500)(0.10) - 3,750
Final Net Invoice Price PhP33,750
b. Total Discount:
Total Discount given is the sum of the first discount and the second
discount.
Total Discount = First Discount + Second Discount
= PhP12,500 + PhP3,750
= PhP16,250
Is the total discount PhP16,250 equivalent to the discount at 35%?
Discount at 35% = PhP50,000(0.35)
= PhP17,500
The discount at 25/10 is not equivalent to the discount, that is, single
trade discount, at 35%.

Method 2.
Use the complement method to solve for the first net invoice price and
the second or final net invoice price. The first net invoice price is the
product of the original selling price and the complement of the first discount
rate. Then, the second or final net invoice price is the product of the first net
invoice price and the complement of the second discount rate.
Complement of 25% or 0.25 = 100% - 25% = 75% or 0.75
Complement of 10% or 0.10 = 100% - 10% = 90% or 0.9

First Net Invoice Price = (SP)(Complement of First Discount Rate)

= (Php50,000)(0.75)
= PhP37,500

20
 Final Net Invoice Price
= (First Net Invoice Price)(Complement of Second Discount Rate)
= (PhP37,500)(0.90)
= PhP33,750
Total Discount given is also original selling price minus the net
invoice price.
Total Discount = PhP50,000 – PhP33,750 = PhP16,250
We computed the same value of total discount as in Method 1.

Method 3.
Convert the discount series of 25/10 to a single equivalent rate. This
is done by first taking the complements of the discount rates. Then multiply
the complements of the discount rates by each other. This product is the
net invoice price rate (NIP rate). Net Invoice Price is computed by multiplying
the NIP rate by the original selling price. Then subtract this NIP rate from
100% to get the single equivalent discount rate. Then multiply this single
equivalent discount rate by the original selling price to get the total discount
given.
Complement of 25% = 75% or 0.75
Complement of 10% = 90% or 0.10

NIP rate = (Complement of 25%)(Complement of 10%)

NIP rate = (0.75)(0.90)
NIP rate = 0.675 or 67.5%

Net Invoice Price = (Selling Price)(NIP rate)

= (PhP50,000)(0.675)
= PhP33,750

Single equivalent discount rate = 100% - 67.5% = 32.5% or 0.325

Total Discount = (Selling Price)(Single Equivalent Discount Rate)

= (PhP50,000)(0.325)
= PhP16,250

The values computed for the net invoice price and total discount are
the same in all three methods. We do hope that in the course of your
computations you will be able to check your answers using the other
methods.
We should also realize that a discount series may also be converted
into a single equivalent discount rate.

Example 2.
Lucila was able to close a sale of a house and lot in the amount of
PhP2,500,000 using a discount series of 20/15/5. Determine the single equivalent
discount rate of 20/15/5, the net invoice price using the three methods, and the
total discount given.
Given: SP = PhP2,500,000
Discount Rates = 20/15/5
Find: a. single equivalent discount rate of 20/15/5
b. net invoice price using the three method
c. total discount given

21
Solution:
a. Single equivalent discount rate of 20/15/5
Complement of 20% = 100% - 20% = 80% or 0.8
Complement of 15% = 100% - 15% = 85% or 0.85
Complement of 5% = 100% - 5% = 95% or 0.95

NIP rate = (0.8)(0.85)(0.95) = 0.646 or 64.6%

Single Equivalent Rate = 100% - NIP rate = 100% - 64.6% = 35.4%

b.1. Method 1:
Selling Price PhP2,500,000
First Discount (2,500,000)(0.20) - 500,000
First NIP 2,000,000
Second Discount (2,000,000)(0.15) - 300,000
Second NIP 1,700,000
Third Discount - 85,000
Third/Final NIP PhP1,615,000
c.1. Total Discount = First Discount + Second Discount + Third Discount
= Php500,000 + 300,000 + 85,000
= PhP885,000

b.2. Method 2:
First NIP = (SP)(Complement of First Discount Rate)
= (PhP2,500,000)(0.80)
= PhP2,000,000
Second NIP = (First NIP)(Complement of Second Discount Rate)
= (PhP2,000,000)(0.85)
= PhP1,700,000
Third/Final NIP = (Second NIP)(Complement of Third Discount Rate)
= (PhP1,700,000)(0.95)
= PhP1,615,000
c.2. Total Discount = (SP) – Final NIP
= PhP2,500,000 – PhP1,615,000
= PhP885,000

b.3. Method 3:
NIP Rate
= (Complement of 20%)(Complement of 15%)(Complement of 5%)
= (0.80)(0.85)(0.95)
= 0.646
Final NIP = (SP)(NIP rate) = (PhP2,500,000)(0.646)
= PhP1,615,000

22
ACTIVITY II:

I. Complete the tables by providing the missing value. Write your solutions on
a separate sheet of paper.
A. Markup and Margin
No. Selling Price Cost of Amount of Rate of Rate of
Goods Profit Margin Markup
1. PhP 35,000 PhP 15,000
2. 50,000 23,000
3. 275 215
4. 1,645 1,100
5. 495,800 400,000

B. Equivalent Single Discount Rate and Net Invoice Price Rate

No. Discount Series Net Invoice Price Rate Equivalent Single Discount
1. 25/10
2. 30/5
3. 25/10/5
4. 10/10/5
5. 15/10/5

II. Solve the following problems completely. Write your solutions on a separate
sheet of paper.
1. A manufacturer sells a tent to its wholesalers for PhP3,000. Wholesalers
take a markup of 15% and sell to retailers who take a markup of 45%. How
much will this tent cost you?
2. Bart makes framed cross-stitch embroideries, at a cost of PhP2,000 per
framed embroidery, to sell at local craft shows. He has 30 frames on hand
for the next show, and expects to sell them all for a total of PhP90,000. What
is Bart’s markup in peso and in percent?
3. In problem 2, what is Bart’s margin in peso and in percent?
4. Tomatoes are on sale at 8% off the regular price. If the regular price of
tomatoes is PhP25 per kilogram, what is the selling price?
5. A clothing store is offering a discount of PhP98.75 for a pajama set that
costs PhP395. What is the discount rate?
6. A kind principal intends to buy 5 laptop computers for teachers’ use in their
online classes. For the volume purchase, he was offered a discount series of
10% and 10%. If each laptop costs PhP28,000, how much will the principal
pay for the 5 laptops?
7. Gerald bought a pair of pants in the amount of PhP2,750 and 4 pairs of
shoes at PhP3,250 each. If the store gave him a discount series of 10/5 how
much would he pay for the goods?
8. Which will give a higher discount for an item worth PhP12,000, discount
series of 10/5 or single trade discount of 15%?
9. Which discount series will give a higher single equivalent rate, 15/5 or
5/15? Why?
2
10. A mobile phone is listed for PhP27,000 less 16 %, 10%, and 8%.
3
a. What will be the net invoice price?
b. What will be the total discount for the purchase?
c. What is the single equivalent rate of discount to the given discount
series?

23
References
eNotes Editorial. 2010. Describe the difference between a Single Trade Discount
versus a Discount Series. Retrieved from
https://www.enotes.com/homework-help/describe-difference-between-single-
trade-discount-145591 on August 8 2020.

https://www.initiatewebdevelopment.com/Business-math/complement-
method.html, 2019. Accessed on August 9, 2020.

Mariano, Norma L. 2016. Business Mathematics. Rex Bookstore. Manila,

Philippines.

Paredes, Lorna I., et. al. (2016). Teaching Guide for Senior High School, Business
Mathematics. Commission on Higher Education. Quezon City, Philippines.

Wong, Danny. 2020. What Science Says About Discounts, Promotions and Free
Offers. Retrieved from https://cm-commerce.com/academy on August 8,
2020.

24
 Lesson

7 Profit and Loss

It is vital for a business to know and understand how much profit it has made
to have an idea as to whether the business is successful. With so much money going
in and out of a business, it is not easy to see whether a small business owner is
earning profit or incurring loss. By calculating profit, it helps give some clarity.
This Module is intended for the eighth week of the first quarter of Business
Mathematics. It will guide the students to comprehend whether a given business
transaction or situation gain profit or incur loss. With the use of this module,
students can define and differentiate profit from loss, illustrate how profit is obtained
and how to avoid loss.

REVIEW:

Answer the activity below, as a prerequisite skill for our new lesson.

Evaluate and solve what is being ask, given the following values.

1. If the cost of manufacturing y units of a souvenir item is represented by

𝐶 = 15𝑦, compute for the cost of manufacturing 10 units.

2. The sales (S) of a certain company is given 𝑆 = 50𝑥, where x is number of

units sold. How much is the sales if there are 100 units sold?

3. The cost of a piece of face shield is PhP65. How much is the cost of 12 pieces
of face shields?

4. The fixed cost of a certain company in producing a product is independent

on the number of units it produces. How much is the fixed cost of 300 units,
if the company has PhP7,500 fixed cost?

5. The quarterly earnings (in hundred thousand pesos) of a computer

manufacturer is given by 𝑃 = 75𝑧 − 15. If z is equivalent to the number of
computers the manufacturer sold, how much is the profit of selling 20
computers?

According to Mariano (2016) determining the profit or loss involves a simple

addition and subtraction. The revenue is a plus item. All expenses are minus items
and, therefore, deducted from the revenue. The result is a profit if it positive and a
loss if it is negative.

After gaining knowledge about mark-up, markdown and mark-on from your
previous lesson, let us study profit and loss. First let us define some terminologies
that are involve in solving profit and loss.

Mariano (2016) defines the following terms and terminologies.

25
Profit is what remains of the selling price (sales) after all costs and expenses had
been deducted.

Cost means the cost of the product sold or service rendered.

Expenses refer to operating expenses (administrative and selling) and financial

expenses (interest and other finance charges).

Loss occurs when the cost and expenses exceed the selling price or sales.

Lopez, et.al. (2016) states that the primary goal of any business whether a
retail or wholesale is to earn a profit. Getting the difference between the amount of
money earned from selling and the cost gives the profit.

To compute for profit and loss we use the following formula:

𝑷𝒓𝒐𝒇𝒊𝒕 = 𝑹𝒆𝒗𝒆𝒏𝒖𝒆 − 𝑪𝒐𝒔𝒕

𝑳𝒐𝒔𝒔 = 𝑪𝒐𝒔𝒕 − 𝑹𝒆𝒗𝒆𝒏𝒖𝒆

Where: Revenue is the amount of money received from selling goods. It is also the
total sales or gross income.

Cost is the amount paid for the goods

And to compute for the percent gain or loss, the following formula should be
used:
𝑺𝒆𝒍𝒍𝒊𝒏𝒈 𝑷𝒓𝒊𝒄𝒆 − 𝑪𝒐𝒔𝒕
%𝑮𝒂𝒊𝒏 = 𝒙𝟏𝟎𝟎
𝑪𝒐𝒔𝒕
𝑪𝒐𝒔𝒕 − 𝑺𝒆𝒍𝒍𝒊𝒏𝒈 𝑷𝒓𝒊𝒄𝒆
%𝑳𝒐𝒔𝒔 = 𝒙𝟏𝟎𝟎
𝑪𝒐𝒔𝒕
Tips: Percent gain (%Gain) is obtained if the selling price is greater than cost
but if the cost is greater than selling price there is a percent loss (%Loss).

Profit occurs when sales of goods is greater than its Cost.

It is the difference after deducting the cost from sales or
revenue.

However, there are cases in which the sales of goods is

less than its cost, such difference is called loss.

26
 In the case when sales or revenue is equal to cost, we call
such situation as break-even, meaning the business has
no profit yet but it does not incur loss. This situation or
topic will be discussed comprehensively in our next
module.

The concepts of profit and loss are further illustrated by the following
examples below:

Example 1. Mr. Cruz bought 20 boxes of alcohol. Each box costs PhP9,500 and
contains 100 bottles of alcohol. He decided to sell one bottle of alcohol at PhP120.
What is his expected profit on 20 boxes of alcohol?

Solution:

First Step: Given: 20 boxes of alcohol containing 100 bottles per

Identify the given and box
unknown in the Cost of each box = PhP9,500
problem. Selling Price per bottle = PhP120
Find: Profit
Second Step:
Compute for the cost of Cost = 20 boxes x PhP9,500 per box
20 boxes of alcohol. = PhP190,000

Third Step: No. of bottles of alcohol = 20 boxes x 100 bottles per box
Compute for the No. of = 2,000 bottles
bottles of alcohol.
Fourth Step: Net Sales = 2,000 bottles x PhP120 per bottle
Compute for the = PhP240,000
revenue.

Fifth Step: Profit = Revenue – Cost

Compute for the = PhP240,000 – PhP190,000
expected Profit. = Php50,000

Finalize your answer Therefore, having a total cost of PhP190,000 and sales
of PhP240,000. His expected profit is amounting to
PhP50,000.

Example 2. Patricia bought a secondhand laptop for PhP18,000 and spends

PhP1,500 for the installation of software applications. If she sells the laptop for
PhP24,500, what is her percent gain or percent loss?

27
Solution:

First Step: Given: Cost of laptop = PhP18,000

Identify the given and Cost of software installation = PhP1,500
unknown in the Selling Price = PhP24,500
problem. Find: Percent gain or loss

Second Step: Total Cost = Cost of laptop + Software installation fee

Compute for the total = PhP18,000 + PhP1,500
cost of laptop including = PhP19,500
software installation
fee.
Third Step: 𝑆𝑒𝑙𝑙𝑖𝑛𝑔 𝑃𝑟𝑖𝑐𝑒 − 𝐶𝑜𝑠𝑡
%𝐺𝑎𝑖𝑛 = 𝑥100
Compute for the 𝐶𝑜𝑠𝑡
𝑃ℎ𝑃24,000−𝑃ℎ𝑃19,500
percent gain or percent = 𝑃ℎ𝑃19,500
𝑥100
loss. Observe that the 𝑃ℎ𝑃4,500
= 𝑃ℎ𝑃19,500 𝑥100
selling price is greater
than cost, so there is a = 0.2308 𝑥 100 (rounded to 4 decimals)
= 23.08%
percent gain.
Finalize your answer Therefore, having sales of PhP24,000 which is greater
than the cost of PhP19,500. Patricia has a percentage
gain of 23.08%.

ACTIVITY II.

Answer the following on a separate sheet of paper by showing your complete solution.

A. Read the given statement and determine if it shows a profit or loss situation. Write
P for profit and L for loss on the space provided.
_____1. Jerbie bought from online seller a pair of shoes amounting to PhP5,300 with
5% delivery charge. He decided to sell it at PhP5,500 because it is not fit on him.

_____2. Aling Fely creates 50 pieces washable facemasks, she spent PhP750 for
materials and PhP125 for the transportation. She sells it for PhP25 each.

_____3. A furniture maker creates a coffee table that sells for Php8,650, he buys all
the materials in a total cost of PhP5,500 plus 8% of the cost as transportation
expenses.

_____4. Allen buys an old hoverboard for PhP11,600 and spends PhP1,500 on its
repairs and sell it for Php15,000.

28
_____5. Santos Trading Firm purchased a second-hand car that cost PhP120,000 and
spend PhP15,000 for repairs. The firm sold the car for PhP220,000. The firm incurred
the following operating expenses:

Advertising PhP12,000

Office Supplies PhP5,000

Rent PhP4,500

Heat, Light, and Water PhP6,000

Miscellaneous Expenses PhP4,000

The firm borrowed money from lending institution for which it paid PhP7,000
in interest.

B. Solve the following problems.

1. Bernie sold a bike to his cousin at a loss of 7%. If his cousin paid PhP9,300 for it,
find the original cost of the bike.
2. Jamby earn PhP2,500 when she sells a jewelry at a profit of 5%. How much is the
selling price of the jewelry?

3. Loida sells 40 pieces of sandals for PhP450 each which she bought at Tutuban
Mall at a wholesale price of PhP390 each. Find her profit or loss

4. Mr. Reyes bought a 150 sq. meters house and lot for PhP1,250,800 with 5%
discount. He spends Php30,000 to transfer the title to his name and another
PhP145,000 for the repairs and renovation. If he sells the house and lot for
PhP1,300,000, what is his percent gain or percent loss?

5. Ruth went to Naga City and bought 75 packs of Pili nuts for PhP7,500 with 18%
discount, she spent PhP1,600 for transportation back and forth. When she returns
home to Bulacan, she sold 50 packs for a total of PhP6,000 and the rest at PhP80
each pack. Determine if Ruth gain a profit or incur loss and how much is her profit
or loss.

References
Lopez, Brian Roy C., et.al. (2016). Business Math. Vibal Group, Inc. Quezon City,
Philippines.

Malang, Paulino P., et.al. (2016). Business Mathematics. St. Andrew Publishing
House. Bulacan, Philippines.

Mariano, Norma D.L. (2016). Business Mathematics. Rex Book Store. Manila,
Philippines.

29
 Lesson

8 Break Even Point

In buying and selling, business owners make sure that they get the fair end
of a deal, and so do customers. My grandmother used to tell me when I would ask
if they had a sari-sari store when they were still starting a family and she said that
they did. She managed that store and shared the experience that she sells items
with little or no profit at times just to get back the capital or ‘puhunan’ at the same
time to provide for the studies of my mother and her siblings. Just like my late
grandmother, business owners do not want to lose their capital. You, as learners
in the area of business also need to master that competency of taking care of the
business in order to not lose your capital. Thus, we are now going to discuss how
to determine the break-even point and solve problems involving buying and selling
as part of our lesson in week 8 of the first quarter in Business Mathematics.

As a review, let us answer the following exercises.

Solve the following systems of equations then graph.

1. 2y = −3x + 4
2y = 3x – 2

2. x − 3y = 3
7x − 3y = −3

Solutions:

1. Given: 2y = −3x + 4 Equation 1

2y = 3x – 2 Equation 2
Subtract the second equation from the 2y = - 3x +4
first. (-) 2y = 3x – 2
0 = - 6x + 6
Add (6x) to both sides of the equation. 6x+0 = -6x+6x +6
6x = 6
Divide both sides of the equation by 6. 6x = 6
6 6
x=1
Substitute x =1 in any of the two 2y = -3(1) +4 = -3 + 4
equations, say Equation 1. 2y = 1
Divide both sides of the equation by 2. 2y = 1
2 2
y=½
The solution to the system of equations: (1,1/2)

30
 Equation 1 Equation 2

2. Given: x – 3y = 3 Equation 1
7x – 3y = - 3 Equation 2
Subtract the second equation from the x – 3y = 3
first. (-) 7x – 3y = - 3
-6x = 6
Divide both sides of the equation by -6. -6x = 6
-6 -6
x = -1
Substitute x =1 in any of the two -1 – 3y = 3
equations, say Equation 1.
Add 1 to both sides of the equation. -1 + 1 – 3y = 3+ 1
-3y = 4
Divide both sides of the equation by -3. -3y = 4
-3 -3
y = -4/3
The solution to the system of equations: (-1,-4/3)

Equation 2

Equation 1

One very important concept in buying and selling is the break-even point
and its analysis. According to Luenendonk (2019) break-even point should be
considered during the preparation of the business plan so that the company may
know if a venture is going to be profitable. It is also important to check on the

31
break-even point during the implementation of the business plan so that the
company may also be guided in terms of adjustment of prices and promotions.
So, what is break-even point? Lopez, et.al. (2016) states that a company’s
break-even point is the point where there are no losses and there are no profits. It
would mean that the company was just able to sell commodities to get back their
capital only. To compute for the break-even point, we have the following formula:

𝐹𝐶
BEP (units) =
(𝑈𝑆𝑃−𝑉𝐶)

BEP (sales) = (BEPunits)(USP)

where: BEP(units) = number of units or volume at break-even point

FC = Fixed Costs
USP = Unit Selling Price, price per piece paid by customers
VC = Variable Costs

In the formulas, BEP(units) is the number of units that any business should
sell so that there will be no losses and no profit, (Mariano, 2016). Fixed costs are
expenses paid by the company without consideration of the number of units being
sold, (Lopez, et.al., 2016). Fixed costs include rent, salaries of employees that are
not included in the direct labor cost of production, loans, and other basic utilities.
Variable costs include expenses that are incurred in coming up with the product,
and these costs would vary according to the number of units produced and sold,
(Lopez, et.al., 2016). BEP(sales) also called the revenue at break-even point is the
total sales when the break-even point is reached.
In the break-even point analysis, it is important that we consider the
revenue. The revenue (Lopez, 2016) is computed to be:

R = (USP)(x)
where:
R = revenue, also, total sales or gross income
USP = unit selling price
x = number of units sold.

In the previous lesson, we mentioned that Profit = Revenue – Cost. At

break-even point, our profit is zero,
0 = Revenue – Cost
Therefore, Revenue = Cost
(USP)(x) = (VC)(x) + FC
(USP)(x) – (VC)(x) = FC
x (USP-VC) = FC
𝐹𝐶
x=
𝑈𝑆𝑃−𝑉𝐶
This is the derivation of the formula where the BEP(units), or our x, is the
number of units to be sold at the point where there is no or zero profit. Our
revenue which is (USP)(x) at the point where there is no, or zero profit is then our
BEP(sales).
When our total costs, TC, is greater than our revenue, R, the company will
incur losses, while the company will earn profit when our revenue, R, is higher
than the value of the total costs, TC.

32
Example 1.
Shane produces some goods that costs PhP750 each. His fixed costs for the
week are PhP4,725, and his variable costs to produce his product are PhP75 per
unit. How many units should he sell in order to break even?
We solve this problem again by identifying the given first, then identify what
needs to be solved (Find), and then we show our solution.
Given: USP = PhP750
FC = PhP4,725
VC = PhP75
Find: BEP (Units)
Solution:
𝐹𝐶
BEP (Units) = (Then, substituting, we have:
(𝑈𝑆𝑃−𝑉𝐶)
4,725
BEP (Units) =
(750−75)
BEP (Units) = 7
Therefore, Shane needs to sell 7 units in order for him to get back his
capital without earning any profit or in order for him to break even.

Example 2.
In Example 1, how much will be his sales at the break-even point? How
much will be his profit if he sells 15 units?
Given: USP = PhP750
FC = PhP4,725
VC = PhP75
BEP (Units) = 7
Find: a. BEP (Sales)
b. Profit when 15 units are sold.
Solution:
a. BEP (Sales) = (BEP(Units))(USP) = (7)(PhP750)
= PhP5,250
b. Profit when 15 units are sold:
Profit = Revenue – Costs
(Notes: 1. Costs = Fixed Cost + Variable Costs(No. of units sold)
2. Revenue = (USP)(No. of units sold)
Thus,
Profit = (USP)(No. of units sold) – (FC + VC(No. of Units Sold))
= (PhP750)(11) – (PhP4,725 + (PhP75)(11))
= PhP2,700
Therefore, Shane will have as sales the amount of PhP5,250 during break-
even. And, he will earn PhP2,700 as profit if he sells 11 units.

Example 3.
Suppose Cecil produces face shields and sells them for PhP25 each. If the
costs incurred in the production and sale of the face shields are PhP75,000 plus
PhP15 for each face shield produced and sold, do the following:
a. Write a revenue function, cost function, and profit function for the
production and sale of x face shields.
b. Graph the revenue, cost, and profit functions on one graph.
c. Find the break-even point in units and in sales.

Given: USP = PhP25

FC = PhP75,000
VC = PhP15

33
Find: a. Functions for revenue, cost, and profit at x face shields
b. Graph of the revenue, cost, profit
c. BEP (Units) and BEP (Sales)

Solution:
a.1. Let us use R for revenue, and x for the number of face shields sold. Our
revenue is computed by multiplying the unit selling price by the
number of units sold. Thus, the function for revenue will be:

R(x) = (Unit Selling Price)(number of units)

R(x) = 25x

a.2. Let us use C for cost, and x for the number of face shields sold. Our
costs will be the sum of fixed costs and variable costs.

C(x) = Fixed Costs + Variable Costs (No. of Units Sold)

C(x) = FC(x) + VC(x)
C(x) = 75,000 + 15x

a.3. Let us use P for profit, and x for the number of face shields sold. Our
profit will be the difference between revenue and costs.
P(x) = Revenue – Costs (Substitute the values of R(x) and C(x).)
= R(x) – C(x)
= 25x – (75,000 + 15x) (Then simplify.)
P(x) = 10x – 75,000

b. In graphing, we prepare a table of values where we set some values of x to

get values for revenues, cost, and profits.
x 2,500 (1) 5,000 (2) 7,500 (3) 10,000 (4) 12,500 (5)
revenue 62,500 125,000 187,500 250,000 312,500
cost 112,500 150,000 187,500 225,000 262,500
profit -50,000 -25,000 0 25,000 50,000

350000

300000

250000

200000
SALES

revenue
150000 cost
fixed cost
100000

50000

0
1 2 3 4 5
UNITS

34
 c. Computing for BEP (Units) and BEP (Sales):
𝐹𝐶 𝑃ℎ𝑃75,000
c.1. BEP (Units) = =
(𝑈𝑆𝑃−𝑉𝐶) 𝑃ℎ𝑃(25−15)
BEP (Units) = 7,500 units

c.2. BEP (Sales) = (BEP(Units))(USP) = (7,500)(PhP25)

BEP (Sales) = PhP187,500

The break-even point is 7,500 units of face shield. It may be seen in the
graph that the revenue and costs met at PhP187,000 and 7,500 units.
This point of intersection is the break-even point. The area below the
break-even point is where the company experiences losses and above the
break-even point, there will be profit already.

Example 4.
Alliyah’s choco candies have the following costs:
Fixed Costs Materials Variable Cost per Piece
General Labor PhP 3,200 Condensed Milk (1000 ml) ₱hP 2.25
Advertising 220 Butter (4 oz.) 0.50
Utilities 1,000 Desiccated coconut 0.12
Total PhP 4,420 Rainbow sprinkles 0.30
Chocolate Sprinkles 0.30
Cocoa Powder 1.20
Cupcake Liners 0.15
Total: PhP 4.82
a. What is the minimum price Alliyah can charge for each candy?
b. If Alliyah prices her chocolate candies PhP10 each, what is her
contribution margin?
c. Calculate the break-even sales units and break-even sales pesos.
Answers:
a. Alliyah’s candy may be sold for a minimum of PhP4.82 per piece since
this is the variable costs per piece, a price where she will not earn
anything.
b. According to Gauron (2014), contribution margin is the part of the
revenue that is available to cover the fixed costs after the variable costs
were paid by such revenue. The formula used to compute for the
contribution margin is:
Contribution Margin = Revenue – Variable Costs
In our problem, for each candy we have:
Contribution Margin = PhP10 – PhP4.82
Contribution Margin = PhP5.18
(Note: In break-even analysis, the contribution margin is a very
important quantity. In the computation of the contribution margin, if it is
found to be is less than the fixed costs, the business has not reached the
break-even point yet. If the fixed costs equal the contribution margin, then
BEP is attained. There is profit when the contribution margin is higher than
the BEP.)

𝐹𝐶 𝑃ℎ𝑃4,420
c. BEP (Units) = = = 854 units
(𝑈𝑆𝑃−𝑉𝐶) (𝑃ℎ𝑃10−𝑃ℎ𝑃4.82)
BEP (Sales) = (BEP(Units))(USP) = (950)(10) = PhP8,540

(In this example, if the revenue is less than PhP8,540, the company will
incur losses. If the company needs to earn profit, efforts should be given so
that they will sell more that PhP8,540.)

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ACTIVITY IV.

I. Answer the following.

1. What quantities are compared in the break-even point?
a. Cost of goods sold and sales
b. Sales and costs
c. Production costs and mortgage expenses
d. Earnings and inventory
2. What quantities are included in the costs?
a. Balance sheet and financing fees
b. Fixed and stockholders’ equity
c. Sales and variable costs
d. Variable and fixed costs
3. What is revenue?
a. It is the price being charged for a service.
b. It is the income in excess of expenses.
c. It is the total income received by selling a product or service.
d. It is the income that is needed to cover all expenses.
4. Break-even point is
a. the total expenses for producing or delivering a good or a service.
b. the situation where revenue is equal to the expenses thereby company
is with zero profit.
c. the expenses that are constant regardless of the volume of production.
d. none of the above.
5. Contribution margin is
a. the revenue used to pay fixed costs.
b. equal to the fixed costs at break-even point.
c. computed by taking the difference between the variable costs and the
total revenue.
d. all of the above
II. Complete the table with the missing values. Show your solution in a
separate answer sheet.

Revenue Expenses Profit

1. PhP 8,000 PhP1,000 PhP
2. PhP1,750 2,000
3. 22,800 -1,500
4. 50,000 50,000
5. 12x + 15,000 0
Contribution Margin Revenue Variable Costs
6. PhP PhP25 PhP 13.25
7. 35 75
8. - 23.50 84
9. 48 21
10. 56 65

III. Solve the following problems completely. Write your solutions on a separate
sheet of paper.
1. MCML produces disposable milk tea cups and sells them at PhP75 per
dozen. The budget department has estimated their fixed costs in producing
such cups to be PhP250,000 and variable costs are at PhP48 per dozen.

36
 How many cups should MCML produce in order to break even? Find the
profit if they produced and sold 30,000 cups.
2. Nieves Tea sells milk tea at PhP75 per cup. If it costs the shop PhP15.95 to
produce one cup and their fixed costs amounted to PhP7,500. How many
cups of milk tea should they sell in order to break even? How much is their
break-even sales?
3. Jiro sells banana cue at PhP10 per piece. His fixed costs amounted to
PhP3,000 and the variable cost per piece is PhP4. How many banana cues
should he sell if he wants to have a profit of PhP1,000? How many banana
cues did he sell if he had a loss of PhP500? How many banana cues should
he sell to break even?
4. Eayah’s bakeshop spent PhP15,000 for salary, electricity, and water. She
spends PhP44 per tub of yema cake which she sells at PhP90. Find the
break-even point in units and in sales. How many yema cakes should she
sell in order to pay for the fixed costs?
5. Determine the break-even point in units if the following are the functions for
revenue and cost:
R(x) = 250x C(x) = 75x + 11,250
6. MML manufactures ready-to-wear blouses. They were able to come up with
the following functions:
R(x) = 75x C(x) = 125 + 16x
a. Sketch the graph of R(x).
b. Sketch the graph of C(x).
c. Find the break-even point in units and in sales.
d. Give outputs for losses and profits.

References
Gawron, Rudy. 2014. Money Math for Teens: Break Even Point. Retrieved from
https://www.saveandinvest.org/sites/saveandinvest/files/ Break-Even-Point.pdf
on August 18, 2020.

Lopez, Brian Roy C. 2016. Business Mathematics. Vibal Group, Inc. Quezon City,
Philippines.

Luenendonk, Martin. 2019. Break-Even Analysis: What, Why, and How.

Retrieved from https://www.cleverism.com/break-even-analysis/ on August 18, 2020.

Mariano, Norma L. 2016. Business Mathematics. Rex Bookstore. Manila,

Philippines.

Paredes, Lorna I., et. al. (2016). Teaching Guide for Senior High School, Business
Mathematics. Commission on Higher Education. Quezon City, Philippines.

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