Professional Documents
Culture Documents
Lesson 7 - Buying and Selling
Lesson 7 - Buying and Selling
SELLING
Give some big and small businesses
in your area that you are familiar
with and identify the main product
or service for which the said
business is known for.
Scenario:
You will be planning a food sale in school where you will have to sell
banana cue during the family day event held by the school.
What is the basis for determining how much we should sell a stick of
banana cue for?
Raw Materials Other Expenses
banana (saba) rent
Sticks cook’s salary
Sugar vendor’s salary
Oil tissue
wrapper for take-out orders
LPG
Let us estimate the cost of the raw materials you will need for the
banana cue.
• rent = 5% of profit
• cook’s salary = PhP400
• vendor’s salary = PhP400
• tissue = PhP50 wrapper (for take-out orders) =
PhP50 TOTAL = PhP900 + 5% of profit
Using the previous data, let us identify and
define the following term.
COST PRICE: the price that a company or store has to pay for the goods
it is going to sell the price that has to be spent to produce goods or
services before any profit is added.
From the previous data the cost price refers to the price of the raw materials needed to produce the banana
cue.
Definition of Terms
OPERATING COST: the price (per unit) incurred relative to the
production and sale of a commodity.
In the previous example, the operating cost would be those additional expenses that have to be incurred
by the class in the actual selling of the banana cue such as rent, salaries of manpower and other incidental
expenses.
Definition of terms
SELLING PRICE: the price at which the commodity is sold per unit.
SELLING PRICE = COST PRICE + OPERATING COST + PROFIT S = C + E + P
where
S = Selling Price
C = Cost Price
E = Operating Expenses
P = Profit
PROFIT: money earned after the cost price and the operating costs
are accounted for after the sale of a commodity
MARK-UP: the difference between the selling price and
the cost price sometimes referred to as MARGIN or
GROSS PROFIT
To compute for the MARK-UP:
where MU = Mark-up
S = Selling Price
C = Cost Price
Significant difference between mark-up and
profit. While profit accounts for both the cost
price and operating cost incurred by the business
owner, mark-up only accounts for the cost of raw
materials necessary to produce the item being
produced for sale.
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 a 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 2
A jacket which costs PhP1,350 is being sold at PhP2,025. What is the
rate of mark-up based on cost?
Example 3