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Mardown, Discounts and Breakeven
Mardown, Discounts and Breakeven
LEARNING OUTCOMES
1. Define markdown
2. Illustrate how markdown is obtained
Why do businesses put items on sale?
MARKDOWN
• also known as DISCOUNT
• Amount deducted from the selling price
of an item
• the difference between the selling price
and sale price
Selling price
• the price at which the item is actually
sold
Sale price
• the discounted price of an item from the
regular selling price
Markdown Rate
• a percent of the original selling price.
Why do businesses put MARKDOWN?
To entice customers to buy more items
To make the price appealing
To get rid of slow-moving merchandise
To stimulate increased sales
To meet the prices of competitors
To draw customers in and get them looking at other
products that have a higher markup
How to compute for MARKDOWN?
STEPS TO COMPUTE SALE PRICE
Independent Exercise
What are the markdown and the
sale price of an antique jar that has
a regular price of K2,607.46 and is
on sale for 26% off the regular
price?
Independent Exercise
Key Takeaways
MARK ON 3
LEARNING OUTCOMES
1. Define mark on
2. Illustrate how mark on is obtained
When do businesses put mark on their
prices?
Mark On
• a temporary mark up on certain products
to take advantage of the high demand
during peak seasons or special occasions
Mark On
• a temporary mark up on certain products
to take advantage of the high demand
during peak seasons or special occasions
How to compute for MARK ON?
STEPS TO COMPUTE MARK ON (BASED ON THE REGULAR SELLING PRICE)
𝑴𝑶 = 𝑷𝑺𝑷 − 𝑹𝑺𝑷
Sample Problem
• Finding the PEAK SELLING PRICE
Armin observes that market goers prefer to buy
fish from him because there is an undersupply of
meat in the market this season. He then decided to
increase the price of tuna by K5.50 per kilogram. If
the cost of tuna is K27.50 per kilogram with a 35%
mark up, what is its new selling price with the
additional increase of K5.50.
Sample Problem
• Finding the COST
What is the cost of a souvenir package being sold
for K58.32 in a special event if the mark up is set
at a rate of 25% of the cost with an approved 10%
mark on rate based on the cost price included?
What is its regular selling price?
Key Takeaways
Answer the following word problems. Show complete solutions and
answers.
1. A basketball backboard set that sold K281.58 is discounted 15%.
What is the sale price?
2. Mr. Quick bought a new computer system. The regular price was
K5631.57, but he got a 20% discount. How much did he pay?
3. The regular price of a Space Invader game is K185.34, but it is on
sale. The discount price is K46.34. What percent discount is this?
ACTIVITY
Breakeven 4
LEARNING OUTCOMES
1. Define breakeven
2. Illustrate how to determine break-even
point and sales
Breakeven point
• It is a point at which neither profit nor
loss is made. The profit at the break-even
is zero, so, R(x) = C(x)
• It is also an indicator to figure out if a
certain business is viable or not.
Breakeven point
• It also determines the needed volume of
products that must be sold to attain a
balance between cost and revenue.
Breakeven sales
• This refers to the amount of product that
must be reached to attain a balance
between cost and revenue.
Break-even sales = Selling price x Break-even point
Cost
•Expenses for production of product
Total cost = Variable cost + Fixed cost
C(x) = Vx + F
Variable cost – expenses of producing one unit of product
Fixed cost – expenses for rent, utilities, wages of
employees, etc. that remain the same no matter how
much product is manufactured or sold.
Revenue
• Money received for the sale of goods or payments
for the services rendered
R(x) = px
Revenue = price per unit x number of units
Profit
• It is the money earned after paying the costs of
producing and selling products or services.
P(x) = R(x) – C(x)
Profit = Revenue – Cost
Sample Problem
• The ABCD Furniture Company produces sofa chairs. The
fixed monthly cost of production is K470,000 and the
variable cost per sofa is K6,200. The sofa chair sells for
K10,500 per piece. For a monthly volume of 140 sofa
chairs, determine the total cost, total revenue and total
profit. What are the break-even point and break-even
sales of the company?
Sample Problem
• Suppose a firm manufactures hand towels and sells
them for K25 each. If the cost incurred in the
production and sale of the hand towels are K200,000
plus K25 for each hand towel produced and sold.