Markon or Initial Markup

Markon or Initial Markup = Selling Price - Cost

Selling Price = Cost + Markon or Selling Price = Cost + Initial Markup
Cost = Selling Price - Markon or Cost = Selling Price - Initial Markup

Example 1: If a 50 g coffee refill pack costs P33.50 and a convenience store adds
an initial markup (or markon) of P7.50 for all items it sells, what is the selling
price for the coffee refill pack?

Solution:
Selling Price = Cost + Initial Markup
= P33.50 + P7.50 = P41.00

Example 2: If a convenience store sells bath soap for P48 and has a markon of
P10, what is the cost of the bath soap?

Solution:
Cost = Selling Price - Markon
= P48 - P10 = P38

Example 3: If a 55 g pack of instant noodles costs P7.10 and is sold for P10, what
is the initial markup of the instant noodles?

Solution:
Initial Markup = Selling Price - Cost
= P10 - P7.10 = P2.90

Solve for the following problems and apply all the concepts learned in the
examples.
1. If a set of Japanese table and chairs costs P5,489.10 and is sold for P7,000
what is the initial markup (or markon) of the set of items?
2. If a floral tank costs P190 and the retailer adds a markon of P100, what is
its selling price?
3. If a 300 mL bottle of soya milk is sold for P35.00 with a markon of P9.75,
what is the cost of the soya milk?
4. What should be your selling price if you wanted a markon of P150 on an
item that costs you P380?
5. What was the initial markup (or markon) of an item that you bought for
P650 from your friend if its costs were only P499?

Here is another set of formulas that is used to compute the rate of markon/initial
markup based on cost when the cost and selling price are known.
Markon = Cosr x Rate of Markon
Rate of Markon = Markon ÷ Cost

Example 4: If a furniture dealer pays P3,644.10 for a kitchen cabinet and sells it
for a markon of P1,355.90, what is the rate of markon based on cost?
Solution:
Rate of Markon = Markon ÷ Cost
= P1,355.90 ÷ P3,644.10
= 0.3721 or 32.71%

Example 5: If a marketing student buys a loaf of bread for P36.50 and sells it for
P45.00 during the marketing week, find the rate of markon based on cost that
she used.

Solution:
Markon = Selling Price - Cost
= P45.00 - P36.50 = P8.50
Rate of Markon = Markon ÷ Cost
= P8.50 ÷ P36.50
= 0.2329 or 23.29%

Use these formulas to find the selling price when the cost and rate of markon
based on cost are known.
Selling Price = Cost + Markon and Markon = Cost x Rate of Markon
Selling Price = Cost + Cost x Rate of Markon
Selling Price = Cost (1 + Rate of Markon)

Example 6: What should be the selling price of a 300 mL can of condensed milk if
it costs P53.00 and the retailer desires to have a markon of 50% based on cost?

Solution:
Selling Price = Cost (1 + Rate of Markon)
= P53.00 (1 + 0.50)
= P79.50

Example 7: If the desired rate of markon based on cost of pair of jeans is 110%
what will be the selling price of the pair of jeans which costs P490?

Solution:
Selling Price = Cost (1 Rate of Markon)
= P490 (1 + 1.10)
= P1, 029

To solve for the cost when the markon/initial markup and the rate of markon
based on cost are known, use these formulas:
Markon = Cost x Rate of Markon
Cost = Markon ÷ Rate of Markon

Example 8: The markon/initial markup for a 155 g can of sardines in tomato

sauce is P2.75, which represents a 20% markon/initial markup based on cost.
What is the cost of the canned sardines in tomato sauce?
Solution:
Cost = Markon ÷ Rate of Markon
= P2.75 ÷ 0.20
= P13.75

Example 9: Find the cost of a box of bottled distilled water if the markon/initial
markup was P300 and the rate of markon/ initial markup was 40% of the cost?

Solution:
Cost = Markon ÷ Rate of Markon
= P300 ÷ 0.40
= P750

This set of formulas is used to find the cost when the selling price and the rate of
markon/initial markup based on cost are known.
Rate of Selling Price = Rate of Cost ÷ Rate of Markon
Rate of Selling Price = 100% + Rate of Markon
Selling Price = Cost x Rate of Selling Price
Cost = Selling Price ÷ Rate of Selling Price

Example 10: A long-sleeved shirt is sold for P790. The rate of markon/initial
markup is 30% of the cost. Find the cost of the long-sleeved shirt and the
markon/initial markup.

Solution:
Rate of Selling Price = 100% + Rate of Markon
= 100% + 30% = 130%
Cost = Selling Price ÷ Rate of Selling Price
= P790 ÷ 1.30
= P607.69
Markon/Initial Markup = Selling Price - Cost
= P790 - P607.69
= P182.31

Example 11: Find the cost and the markon/initial markup for a printed long-
sleeved blouse which is sold for P1,290 and whose rate of markon is 63.29% of
the cost.

Solution:
Rate of Selling Price = 100% + Rate of Markon
= 100% + 63.29% = 163.29%
Cost = Selling Price ÷ Rate of the Selling Price
= P1,290 ÷ 1.6329
= P790.01
Markon/Initial Markup = Selling Price - Cost
= P1,290 - P790.01
= P499.99
Solve the following problems.
1. If a furniture dealer pays P11,048.62 for a dining set and sells it for an
initial markup of P3, 951.38, what is the rate of the initial markup based
on cost?
2. What would be the selling price of a cardigan which costs P790 with a
desired markon rate of 60% based on cost?
3. What is the cost of a kilogram of brown sugar if the markon for a kilogram
of brown sugar is P12.00, which represents a 20% markon based on cost?
4. A gadget is sold for P12, 300. The rate of markon/initial markup used is
50% of the cost. Find the cost of the gadget and the markon.
5. What is the rate of markon based on cost for an item that is being sold for
P999 if its costs only P699?

Markup
Markup is obtained by getting the difference of the new selling price and the
original selling price. The following formulas may be used:
Markup = New Selling Price - Original Price
New Selling Price = Original Selling Price + Markup
Original Selling Price = New Selling Price - Markup
Markup Rate = Markup ÷ Original Selling Price

Example 12: What are the markup and the rate of markup if a retailer has
increased the selling price of a can of powdered milk from P44.15 to P57.10?

Solution:
Markup = New Selling Price - Original Selling Price
= P57.10 - P44.15 = P12.95
Markup Rate = Markup ÷ Original Selling Price
= P12.95 ÷ P44.15 = 0.2933 or 29.33%

Example 13: In example 12, what are the markup and new selling price if the
retailer has changed his mind and decided to just apply 15% markup rate on the
selling price of the powdered milk?

Solution:
From the given formula for the markup rate, derive the formula for the
markup.
Markup = Original Selling Price x Markup Rate
= P44.15 x 0.15
= P6.62
New Selling Price = Original Selling Price + Markup
= P44.15 + P6.62 = P50.77

Example 14: What was the original selling price of the furniture set you have
purchased for P89,999 if there was a markup rate of 15%?
Solution:
The formula of the original selling price was derived as follows:
Markup = Original Selling Price x Markup Rate
New Selling Price = Original Selling Price + Markup
New Selling Price = Original Selling Price + (Original Selling Price x
Markup Rate)
New Selling Price = Original Selling Price (1 + Markup Rate)
Original Selling Price = New Selling Price ÷ (1 + Markup Rate)
= P89,999 ÷ (1 + 0.15)
= P78, 260

Example 15: What was the markup rate applied by a liquefied petroleum gas
(LPG) dealer if she has increased the price of an 11 kg cylinder of LPG from P832
to P896?

Solution:
Markup = New Selling Price - Original Selling Price
= P896 - P832 = P64
Markup Rate = Markup ÷ Original Selling Price
= P64 ÷ P832
= 0.0769 or 7.69%

Markdown
Markdown is obtained by getting the difference of the original selling price and
the new selling price. Unlike in the case of markup, the new selling price is lower
than the original selling price. Hence, the formula for computing markdown is
the following:
Markdown = Original Selling Price - New Selling Price
Markdown Rate = Markdown ÷ Original Selling Price

Example 16: Your apparel store usually offers items with markdowns at the end
of season. If the price of the slim fit jeans was reduced form P1,290 to P999, what
is the markdown? What is the rate of markdown introduced by your store?

Solution:
Markdown = Original Selling Price - Markdown Price
= P1,290 - P999 = P291
Markdown Rate = Markdown ÷ Original Selling Price
= P291 ÷ P1,290
= 0.2256 or 22.56%

Example 17: If men’s accessories (cap/hat) are being sold for P990, what should
be the new selling price if you decided to give a markdown rate of 20%?

Solution:
Markdown = Original Selling Price x Markdown Rate
= P990 x 0.20 = P198
New Selling Price = Original Selling Price - Markdown
= P990 - P198 = P792
Example 18: What was the original selling price of a smart TV if it was purchased
for only P43, 199 at a marked down rate of 20%?

Solution:
The formula for the original selling price can be derived as follows:
Markdown = Original Selling Price x Markdown Rate
New Selling Price = Original Selling Price - Markdown
New Selling Price = Original Selling Price - (Original Selling Price x
Markdown Rate)
New Selling Price = Original Selling Price (1 - Markdown Rate)
Thus, the formula for original selling price is given as:
Original Selling Price = New Selling Price ÷ (1 - Markdown Rate)
= P43,199 ÷ (1 - 0.30)
= P61, 712.86

Solve for the following problems and apply all the concepts learned in the
examples.
1. Your store has decided to apply a markdown rate of 35% on all men’s
apparel in celebration of Father’s Day. If the original selling price of men’s
long-sleeved shirt is P890, what would be the new selling price of the
shirt?
2. What is the markdown rate applied if the original price of camera was
P39,999 and after a month it was being sold for P25,999?
3. During a closing sale, items are marked down at a rate of 70%. If one of
the items sold was purchased at P5,699, how much was the original
selling price of the said market down item?
4. What is the new selling price of wrist watch worth P19,900 when the
store manager decided to give a markdown rate of 20% on all items as
part of the store’s anniversary promo?
5. Your mother bought an appliance worth P29,950 for only P19,995. How
much was the markdown rate applied by the store?