SENIOR HIGH SCHOOL

Business Mathematics
Quarter 1 Module 5
(Week 7)
Profit and Loss

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About the Module

This module was designed and written with you in mind. It is here to help you master
about Profit and Loss. The scope of this module permits it to be used in many
different learning situations. The language used recognizes the diverse vocabulary
levels of students. The lessons are arranged to follow the standard sequence of the
course. But the order in which you read them can be changed to correspond with
the textbook you are now using.

This module is divided into two lessons, namely:

Lesson 1 – Determining the Profit
Lesson 2 – Determining the Loss

After going through this module, you are expected to:

• differentiate profit from loss; and
• illustrate how profit is obtained and how to avoid loss in a given transaction

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 What I Know (Pre-Test)
Instruction: Choose the letter of the correct answer to the following items. Write
them on a separate sheet of paper.

1.) To compute profit and loss obtained: profit/loss = revenue - _______

A. cost B. gross profit C. net loss D. net sales

2.) A positive value indicates profit, while a negative value indicates ________.
A. loss B. price C. profit D. sales

3.) A ______ is incurred when the cost of goods sold is greater than the net sales.
A. net loss B. net sales C. price D. profit

4.) _______ is the difference between revenue and total cost, provided that the
revenue is greater than the cost.
A. cost B. loss C. price D. profit

5.) These include utilities, labor, operating expenses and so on.

A. fixed assets B. fixed costs C. inventory D. purchase

6.) ______ is not the actual profit of a business and it is found by deducting the cost
of goods sold from net sales.
A. Gross Profit B. Gross Sales C. Loss D. Net Sales

7.) ______ is considered as the actual profit retained by a business and it is

actually, the difference between the revenue earned by the company and the
expenses incurred
A. Gross Profit B. Gross Sales C. Net Profit D. Net Sales

8.) A type of loss can also mean that the total expenses incurred by a company
is greater than the income for a particular period.
A. Gross Profit B. Gross Sales C. Net Loss D. Net Sales

9.) ______ indicates the amount of sales after deducting sales returns, allowances
and discounts.
A. Gross Profit B. Gross Sales C. Net Loss D. Net Sales

10.) The ____ is the amount of money that still needs to be settled after all the costs
and payables have been deducted from the earnings generated.
A. cost B. loss C. price D. profit

11.) Shirly the owner of S Carinderia earned a total of ₱ 7,100.00 for a day. She
noted that she has spent a total of ₱4,125.00 on the same day. Determine her
profit for the day.
A. ₱1,989.00 B. ₱2, 975.00 C. ₱3,100.00 D. ₱4, 010.00

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12.) Mark was able to generate a revenue of ₱1,650.00 from his car wash business
today. If his profit was ₱530.00 how much was the expense he incurred for the
day?
A. ₱1,002.00 B. ₱1,021.00 C. ₱1,120.00 D. ₱1,152.00

13.) You own a noodle stand that earned a gross profit of ₱67,325.00 in May. How
much is your cost of goods sold if your noodles stand had net sales of ₱99,578?
A. ₱30,574.00 B. ₱31,870.00 C. ₱32,253.00 D. ₱33,450.00

14.) You have put up a pizza house and on the first month of operation, you incurred
a net loss of ₱7,865. If your operating expenses for the first month amounted to
₱37,468.00, how much was your gross profit then?
A. ₱28,675.00 B. ₱29,603.00 C. ₱30,500.00 D. ₱33,850.00

15.) ABC’s Enterprise selling expenses amounted to ₱234,000.00, while its

administrative expenses reached ₱212,400.00. Inventory of their merchandise at
the beginning of the year was ₱135,000. Purchases of ₱1,135,000 was made
during the year. At the end of the year, the inventory of their merchandise was
₱550,000.00. Their sales returns and allowances amounted to ₱ 45,000. ABC’s
Enterprise had a total sale of ₱1,135,000. What is the net profit or loss of the
enterprise?
A. -₱77,012 B. -₱76,400 C. -₱75,375 D. -₱74,500

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Lesson Determining Profit
1

What I Need to Know

At the end of this lesson, you are expected to:
• define profit; and
• calculate profit

What’s In
Activity 1.1
Now that you know about markup, markdown, margin and discounts, let
us study profit and loss. Determine whether the following statement shows
a profit or loss situation. Write P for profit and L for loss.

_____1. Raquel bought a pen at ₱12 each and sold it for ₱15.
_____2. Margie bought a scientific calculator at ₱2,000. When a new and
upgraded model was released after two months, she sells her
scientific calculator for ₱1,300 to buy the new one.
_____3. A banana cue vendor gains ₱100 for selling it at ₱10 per stick.
_____4. The cost of 10 pieces personalized calendar is ₱850 and it was sold
for ₱150 each.
_____5. Eda bought a 16gb memory card at ₱600 and decided to sell it to
her sister for ₱650.

What’s New

Determining Profit
(Adapted from: Shio, Briones, Mallari, Graces and Pefianco, 2017)

One measure to check if a business is doing well is by determining

whether or not it is making a profit.
In doing business, you should not just be interested in how your sales
are doing. You should also be concerned about whether or not you are able to
meet all the payables, including operating expenses and production costs.
Taking into consideration these two amounts (revenue and cost), you could
say that business is doing well if your total revenue exceeds your total cost.

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Types of Profit
(Adapted from: megaessays.com)

The easiest way to explain profit is the income a company earned in a

certain period of time. There are two types of profit namely gross profit and
net profit. Gross profit is not the actual profit of a business and it is found by
deducting the cost of goods sold from net sales. Thus, net profit is considered
as the actual profit retained by a business and it is actually the difference
between the revenue earned by the company and the expenses incurred.

What Is It

Definition
Profit is the difference between gross revenue and total cost,
provided that the revenue is greater than the cost.

In other words, the profit is the amount of money left after all the costs
and payables have been deducted from the earnings generated. Given that it
is the amount of money left, it is then necessary that the sales/revenue is
higher than the cost. In equation form, the profit is given by:

Profit = Revenue - Cost

where Revenue > cost

Example 1:

A carinderia owner earned a total of ₱5, 650.00 for the day. Looking at
her notebook, she noted that she has spent a total of ₱ 3,125.00 on the same
day to cover all the ingredients and other things she used for her store.
Determine her profit for the day, if any.

Solution:
Her gross revenue is ₱5,650.00, while her total cost is ₱3,125.00 then,
her profit is given by

Profit = 5,650 – 3,125

= ₱2,525.00

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Example 2:

Juan sells bracelets to earn extra cash. He sells them for ₱20.00 each.
To produce one bracelet, he spends ₱17.00 for the needed materials. How
much is his profit if he was able to sell 21 bracelets?

Solution: 21 pcs bracelets x ₱ 20 each = ₱420

Profit = ₱ 420 – 357
21 pcs bracelets x ₱ 17 each = ₱357

Profit = ₱ 63.00

Alternatively, notice that Juan has to spend ₱17.00 to make one

bracelet, but will receive ₱20.00 if he sells them. Hence, for each bracelet, he
will earn a profit of ₱20-17 or ₱3.00. Since he was able to sell 21 bracelets,
then his profit is ₱3 x 21, or ₱63.00.

Given the unit price and the unit cost of an item, the profit per item is given
by

Unit Profit = Unit Price – Unit Cost

Then, the total profit is given by

Profit = Unit Profit x Quantity Sold

Aside from the cost of goods sold, each business also has some fixed
costs to cover. These include utilities, labor, operating expenses and so on.
They are called fixed costs because they are not affected by the amount of
goods sold.

Example 3:

Maria owns a small pastry shop that sells cupcakes. Last month, she
was able to sell 1,012 cupcakes for ₱45.00 each. To produce one cupcake, she
has to spend ₱33.00 for the ingredients. Aside from the cost of goods bought,
she also has to pay for the rent and electricity that amount to ₱4,000.00 and
₱2,300.00, respectively. How much is her profit for the month, if any?

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Solution:

The amount of her total sales is ₱45.00 x 1,012 or ₱45,540.00, while

her production cost is ₱33.00 x 1,012 or ₱33,396.00. Then, her profit is given
by

Profit = 45,540 – (33,396 + 4,000 + 2,300)

= 45,540 – 39,696
Profit = ₱5,844.00

What’s More
Activity 1.2: NOW IT’S YOUR TURN!
Instruction: Do what is being asked and write your answer in a separate
sheet of paper.

A. Solve the problem and show your solutions.

1.) Rodrigo is engaged in a buy-and-sell business of perfumes. He

bought 10 boxes of perfumes. Each box costs ₱12,000.00 and
contains a dozen of perfume bottles. He is planning to sell one
perfume bottle at ₱1,500.00. What is his expected profit on the 10
boxes of perfumes?

2.) A small sari-sari store earned a total of ₱7,124.00 last month. On

the other hand, its expenses included ₱5,145.00 for groceries and
₱2,100.00 for electricity. How much was its profit?

B. Make a problem related to the above problems or all about determining

the profit and show your solutions.

What I Need to Remember

Businesses are typically established in order to gain a profit, which is

often referred to as the bottom line in every business. The ultimate goal of
any business whether a retail or wholesale is to earn profit.
Profit is the amount of money that is left from a company’s revenue
after it pays for its expenses in doing business.
Given it is the amount of money left, it is then necessary that the
sales/revenue is higher than the cost.

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Lesson Determining the Loss
2

What I Need to Know

At the end of this lesson, you are expected to:
• define loss; and
• explain how to avoid loss in a given transaction

What’s In
Activity 2.1: Basic Calculations
Find the value of the missing variables, which are defined as follows:

• P /L is the profit/loss;
• R is the total revenue; and
• C is the total cost of expenses

1.) 4.) P/L

P/L
R ₱3,000 R ₱10,000
C ₱10,500
C ₱1,000

2.) P/L ₱2,000 5.) P/L ₱1,500

R R
C ₱1,750 C ₱22,800

P/L ₱9,000 P/L

3.) 6.)
R R ₱12,500
C ₱10,500 C ₱13,200

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 What’s New

In the previous example, the store was not able to make any profit, as
its generated revenue was less than the cost incurred. In these situations,
the business is said to be at a loss.

Loss is a one-time removal or decrease in a business resource or asset.

It is unrecoverable and unanticipated.

The most common types of losses refer to the amount that an asset
decreases in value over the course of its useful life for your business. All
fixed (long-term) assets suffer from depreciation over time, and the
differences in these value is what is referred to as loss. These assets do not
include any inventory sold.

What is It
Avoiding Losses
(Adapted from: Shio, Briones, Mallari, Graces and Pefianco, 2017)

Definition
The loss of a business is the difference between the total cost
and the generated revenue, provided that the cost is greater than the
revenue.

Then, the loss is the amount of money that still needs to be settled after
all the costs and payables have been deducted from the earnings generated.
In general, the profit/loss of a business is given by

Loss = Revenue – Total Cost

where it is a Profit if Revenue > Cost and a Loss if Revenue < Cost.

Example 4:
Betty plans to sell customized bags in an upcoming bazaar. To create
one bag, she has to spend ₱412.00 for the materials, and she will sell it for
₱450.00 to participate in the bazaar, she has to pay participation and rental
fees totaling ₱5,000.00. If she was able to create 130 bags, and she believes
she can sell them all, should she participate in the bazaar?

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Solution:
The total expected revenue of Betty is ₱450.00 x 130 or ₱58,500 while
her expected production cost is ₱412.00 x 130 or ₱53,560. Then, her
expected profit/loss is

production cost
Profit/Loss = 58,500 – (53,560 + 5,000)
participation and
rental fess
= 58,500 - 58,560
Loss = -60

Or a loss of ₱60.00. Since she will incur a loss, it would be best for her not
to join the bazaar, or she may produce more bags.

Example 5:
On a certain day, Bareg made 100 pieces of pancake to sell. It costs
him ₱4.50 to make one piece of pancake. Suppose, he sold all the pancakes
and his total sales is ₱432.00. How much was his loss?

Solution:
Bareg’s total cost of expenses is:
Cost = (4.50)(100) = 450

The results show that the total cost of expenses is higher than the revenue,
which leads to a negative profit or loss.
The loss is computed as follows:

Loss = Revenue – Total Cost

= 432 – 450
= -18

Therefore, Bareg’s loss is ₱18.00.

In the given, Bareg incurred a loss. It could have been avoided if he set a
mark-up rate for each piece of pancake based on the cost of each pancake.

What’s More
Activity 2.2: NOW IT’S YOUR TURN!
Instruction: Do what is being asked for and write your solutions on a
separate sheet of paper.

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 Andres designs and produces customized shirts. He sells them for
₱250.00 per shirt. Plain shirts cost him ₱120.00, and his monthly utilities
(rent and electricity) cost him ₱7,410.00.

A. How many customized shirts should he sell to avoid incurring losses?

B. If you are Andres, cite 3 best ways to avoid losses?

Note: The rubric below will be used to rate your answer.

RUBRIC FOR ESSAY

Needs
Good
Criteria Improvement Excellent (3 Points)
(2 Points)
(1Point)
Answer are Answer is not
partial or comprehensive Answers are
incomplete. Key or completely comprehensive,
points are not stated. Key accurate and complete.
Content
clear. Answer is points are Key ideas are clearly
not enough to addressed, but stated, explained, and
answer the not well well supported.
question. supported.
Inadequate
Organization is
organization. Well organized,
mostly clear
Organization Structure of the articulately developed
and easy to
answer is not and easy to follow.
follow.
easy to follow.
Displays 5 or Displays 1-4 or
more errors in more errors in
Displays no errors
spelling, spelling,
Writing in spelling,
punctuation, punctuation,
Conventions punctuation, grammar,
grammar, and grammar, and
and sentence structure
sentence sentence
structure structure

What I Need to Remember

When does a loss occur?

(Cited from Lopez, Lundag and Dagal 2016)

Sometimes, a businessman experiences loss because of mismanagement,

unfavorable market conditions, change in trends for fashionable goods, poor
economic situation, unsold perishable goods, release of new and advanced
models for appliances and electronic gadgets, and a lot more.

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 item and, therefore, deducted from the revenue. The result is a profit if
it is positive and a loss if it is negative.

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 An income statement is the financial statement that shows the results of
operation, that is, if it earns a profit or incurs a loss for a given period of time.

What I Can Do
A. The income statement of RCUBED Tutorial Center is shown
below. Calculate the net profit/loss. Show your solutions.

2018 Income Statement of RCUBED Tutorial and Review Center

Items Cost (₱) Revenue (₱)
Tutorial and Review Fees 1,656,250
Operating Expenses
Salaries, Wages, and Bonuses 822,000
Utilities 84,000
Supplies 15,000
Rent 228,000
Advertisements 4,000
Total Expenses
Net Profit/Loss

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 Assessment (Post Test)

Instruction: Choose the letter of the correct answer. Write it on a separate

sheet of paper.

1.) The amount of money that still needs to be settled after all the costs
and payables have been deducted from the earnings generated.
A. cost B. loss C. price D. profit

2.) It’s not the actual profit of a business and it is found by deducting the cost
of goods sold from net sales.
A. gross profit B. gross sales C. loss D. net sales

3.) A positive value indicates ______, while a negative value indicates loss.
A. loss B. price C. profit D. sales

4.) _____ is the result of the total expenses encountered by a company

is greater than the income for a particular period.
A. Gross Profit B. Gross Sales C. Net Loss D. Net Sales

5.) These include utilities, labor, operating expenses and so on.

A. Fixed Assets B. Fixed Costs C. Inventory D. Purchase

6.) To compute profit and loss obtained: profit/loss = revenue - _______

A. cost B. gross profit C. net loss D. net sales
7.) _______ is the difference between gross revenue and total cost, provided that
the revenue is greater than the cost.
A. cost B. loss C. price D. profit

8.) ______ is considered as the actual profit retained by a business and it is

actually the difference between the revenue earned by the company and the
expenses incurred
A. Gross Profit B. Gross Sales C. Net Profit D. Net Sales

9.) A ______ is incurred when the cost of goods sold is greater than the net sales.
A. net loss B. net sales C. price D. profit

10.) ______ indicates the amount of sales after deducting sales returns, allowances,
and discounts.
A. Gross Profit B. Gross Sales C. Net Loss D. Net Sales

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11.) Jay-R bought two digital cameras at ₱15,490.00 each. He sold one of the
cameras to his friend at ₱13,500.00, while the other one was sold to his
neighbor at ₱16,200. How much is Jay-R’s profit or loss?
A. -₱1,493.00 B. -₱1,405.00 C. -₱1,345.00 D. -₱1,280.00

12.) Michelle went to Baguio and bought 20 jars of strawberry jam for ₱3,500.00
with 15% discount. When she got back to Cebu, she sold 10 of the jams for a
total of ₱1,800.00, and the rest at ₱185.00 each. How much profit did Michelle
gain?
A. ₱559.00 B. ₱598.00 C. ₱675.00 D. ₱695.00

13.) How much were the net sales of your ice cream house if your cost of goods
sold and gross profit were ₱85,675.00 and ₱54,900.00, respectively?
A. ₱140,575.00 B. ₱142,600.00 C. ₱149,000.00 D. ₱150,450.00

14.) On the second month of operation, you strictly monitored and controlled the
operating expenditures of your pizza house. Because of this, you were able to
achieve a net profit of ₱22,750.00 for the month. How much was the operating
expenses for the month if your gross profit was ₱51,595.00?
A. ₱26, 450.00 B. ₱27,380.00 C. ₱28,845.00 D. ₱30,525.00

15.) Annie bought one dozen of smartphones for ₱200,00.00 with a discount of 5%.
Half dozen was sold at a price of ₱18,000.00 per unit. However, a new model
of smartphone became available in the market, so she sold the remaining half
dozen at ₱12,000.00 each unit. What was her profit or loss?
A. -₱13,000.00 B. -₱12,000.00 C. -₱11,000.00 D. -₱10,000.00

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Activity 2.2
Let x be the number of shirts Andres needs to sell. For
him to avoid losses, his total revenue must be greater
than the total cost. Then,
Activity 2.1
Revenue > Cost
1.) ₱2,000.00
250x > 120x + 7,410
2.) ₱3,750.00
130x > 7,410 3.) ₱19,500.00
4.) -₱500.00
x > 57 5.) ₱24,300.00
That is, he has to sell more than 57 shirts. 6.) -₱700
Activity 1.2
1.) We compute first the cost of 10 x12 = 120 bottles
Since each box costs ₱12,000.00 and Rodrigo bought 10 boxes,
Cost = 12,000 (10) = ₱120,000
Rodrigo can expect that the net sales he will get upon selling 10 boxes
consisting of 120 bottles is,
Net Sales = 1,500 (120) = ₱180,000.00
Thus, he has
Profit = Net Sales -Cost
= 180,000.00 -120,000.00
= ₱60,000.00
2.) The store’s gross revenue is ₱7,124.00 and its total cost is ₱7,245.00
Profit/loss = 7,124.00 – 7,245.00
Loss = -₱121.00
Activity 1.1
1. P
2. L
3. P
4. P
5. P
HONESTY is required.
Remember: This portion of the module contains all the answers. Your
Answer Key
References

Text Book

Solano, I.P. and Alarcon, D.C. Business Math. Makati City, Philippines: Diwa
Learning Systems, Inc. 2016. pp. 80-91.
Chan Shio, C.P.O, Briones, J.C., Millari, J.C.F., and Garces, L.P.D. Business
Mathematics for Filipinos. Quezon City, Philippines: The Phoenix Publishing
House, Inc. 2017. pp. 91-95.
Bacani, J.B. and Soriano, J.M. Business Mathematics for Senior High School.
Quezon City, Philippines: C & E Publishing, Inc. 2017. pp. 121-126.
Lopez, B.R.C., Lundag, L.M. and Dagal, K.A.P. Business Math. Quezon City,
Philippines: Vibal Group Inc. 2016. pp. 68-71.

Websites

“Net Sales” What is Net Sales: retrieved from shorturl.at/aioMX on August

13, 2020.
“Net Sales” Calculating Net Sales: retrieved from shorturl.at/tKMPS on
August 13, 2020.
“Profits” What id Business Profit: retrieved from shorturl.at/HTV69 on
August 14, 2020.
“Loss” Losses: retrieved from shorturl.at/mwIVW on August 14, 2020.

Congratulations!
You are now ready for the next module. Always remember the following:

1. Make sure every answer sheet has your

▪ Name
▪ Grade and Section
▪ Title of the Activity or Activity No.
2. Follow the date of submission of answer sheets as agreed with your
teacher.
3. Keep the modules with you AND return them at the end of the school
year or whenever face-to-face interaction is permitted.

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