Business Math- SHS Grade 11

Student’s
Name Grade and Section
___________________________________ ________________________
Teacher Date Submitted
___________________________________ ________________________

Introduction
Did you know that break-even analysis is a very important factor in understanding the
financial health of a company? It helps determine the relationship among various elements
such as costs (variable and fixed), prices, and volume of sales that will make revenue and
total cost equal, which means that there is no profit nor loss.
This learning activity will explain the break-even point, the way it is computed, and
the formula in determining the break-even point. This packet also includes analyzing and
solving various problems which involve buying and selling of products that could enhance
the analytical and problem-solving skills.
Another important topic included is to help you understand how interest is applied on
either investment or obligation. As you go through, a scientific calculator is essential for
significant computations.
Let’s begin.

Learning Competencies
1. Determine the break-even point.
2. Solve problems involving buying and selling products.
3. Compute interest specifically as applied to mortgage, amortization, and on
services/utilities and on deposits and loans.

Activities

Lesson 1
Break-Even Points

Break-Even Point Definition

Break-even point is the level of production at which the total revenues equal the total
expenses during a manufacturing process in a given accounting period. Since revenues
equaled expenses, the net income for the period will be zero.

Calculating the Break-Even Point

To calculate the break-even point, sales and costs are needed. Costs include fixed
costs and variable costs. Fixed costs are expenses that remain relatively the same and do
not change based on production or sales volume. Examples are rent or mortgage expenses,

RO_Business Mathematics_Grade 11_Q3_LP 8 1

salaries of employees, loans, equipment expenses and capital expenditures. Variable
costs are not consistent, and change based on the production output or a change in sales
volume. It is the cost of producing each product. Examples are wages, utilities, commissions,
and marketing. Variable costs are flexible and can go up and down every month based on
business activities. Cost of Goods Sold (COGS) is considered a variable cost because the
amount will vary based on the quantity of products produced and the cost of the materials
used to manufacture products. Another important factor in break-even analysis is the
revenue.
R=px , where R is the revenue, p is the price and x is the number of units
At break-even, the total cost TC is compared with the total revenue R to determine the
level of production (that is, number of units produced) at which TC=R.
To determine the number of units to be sold to break-even, we can assume that:
Sales = Variable Costs + Fixed Costs
If we let x represent the number of units to break-even, we can use the following
formula adapted from the above formula.
Px=vx + FC , where P=unit Price
x=number of units
v=variable cost per unit ;∧¿
FC =¿ cost

Therefore, the break-even point BEP in number of units would be:

FC
x=
P−v
The break-even point BEP in pesos would be:
BEP in Pesos = (Unit Price) (BEP in Units)

Example 1:
Calculate the break-even point in sales units and sales in pesos from the following
information:
Unit price ₱20
Variable cost ₱8
Fixed costs ₱12,000

Solution:
Substituting the given values into the formula for break-even point in sales
units, we get:
FC
BEP∈Units(x)=
P−v
₱ 12,000
BEP∈Units ( x )=
₱ 20−₱ 8
x=1000 units
BEP∈Pesos=(Unit Price)( BEP∈Units)
¿( ₱ 20)(1,000)
BEP∈Pesos=₱ 20,000

Example 2:
Ace Merchandising’s variable cost per unit is ₱ 8.00. The company’s rent expense is
₱ 4,000; salaries expense is ₱ 8,000 and bank loan amortization is ₱ 4,000. If the company
sold a total of 20,000 units yielding total sales of ₱ 200,000, find the BEP in units and BEP
in pesos.
variable cost per unit ( v )=₱ 8.00
Rent expense ¿ ₱ 4,000

RO_Business Mathematics_Grade 11_Q3_LP 8 2

 Salaries expense ¿ ₱ 8,000
Bank loan amortization ¿ ₱ 4,000
Number of units sold ( x )=20,000
Total sales ¿ ₱ 200,000
First, we need to find the FC, that is
Rent expense ¿ ₱ 4,000
Salaries expense ¿ ₱ 8,000
Bank loan amortization ¿ ₱ 4,000
Total ¿ ₱ 16,000.00

Next, we need to find the unit price, that is

Total sales
Unit Price=
number of Units sold
₱ 200,000
Unit Price=
20,000
Unit Price= ₱ 10.00

Then, we can now find the BEP in units and BEP in pesos
FC
a. BEP∈Units(x)=
P−v
₱ 16,000
BEP∈Units(x)=
₱ 10−₱ 8
₱ 16,000
BEP∈Units(x)=
₱2
BEP∈Units ( x )=8,000

b. BEP∈Pesos=(Unit Price)( BEP∈Units)

¿( ₱ 10)(8,000)
BEP∈Pesos=₱ 80,000

Lesson 2
Buying and Selling

Solving Problems Involving Buying and Selling of Products

This is an application of your previous lessons designed to enhance your analytical
as well as problem solving skills. In this lesson, you will be analyzing and solving various
problems involving buying and selling of products.

Example 1
Janine buys a girl’s cologne for P35. The rate of mark-up based on cost is 25%. Find
the selling price and the mark-up.
Solution: MU = 0.25 x 35
= ₱ 8.75
SP = ₱35 + ₱8.75
SP = ₱ 43.75
The selling price of girl’s cologne is ₱ 43.75 which includes a mark-up of ₱ 8.75

RO_Business Mathematics_Grade 11_Q3_LP 8 3

Example 2

Find the cost and mark-up of one ream of white long bond paper being sold for P125
with a 20% mark-up based on selling price.
Solution:
MU = (MU%) (SP) C = SP – MU
= 0.20 x ₱125 = ₱125 – ₱25.00
=₱25.00 = ₱100.00
The cost price of one ream of long white bond paper is P100.00 and the mark-
up is ₱25.00.

Example 3
Mang Gorio, a meat vendor in Barangay San Isidro, supplies meat not only in his
own barangay but also in the neighboring barangays. He decided to increase the price of
meat by ₱5 per kilo. If the cost of pork is ₱270 per kilo with a 25% mark-up, what is its new
selling price with the additional increase of ₱5? By how much is the rate of mark-up based
on cost increased by adding ₱5 to the regular selling price of the pork?
Solution:
MU ¿ ( 0.25 ) ( ₱ 270 )
¿ ₱ 67.50

Selling price before the increase:

SP=C + MU
¿ ₱ 270+ ₱ 67.50
¿ ₱ 337.50

Selling price after increase:

PS=₱ 337.50+ ₱ 5.00
PS=₱ 342.50

Combined Rate of Mark-up and Mark-on

₱ 67.50+ ₱ 5.00
¿
₱ 270.00
₱ 72.50
¿
₱ 270.00
¿ 0.2685 x 100
¿ 26.85 %
The mark-up is increased by 1.85% by the additional mark-on of P5.00 by Mang
Gorio.

Lesson 3
Interests and Its Application

Simple and Compound Interest on Deposit and Loan: A Recall

Simple interest – the charging interest rate r based on a principal P over t number
of years.
I =Prt

Example 1 (Simple Interest on Deposits)

RO_Business Mathematics_Grade 11_Q3_LP 8 4

 You deposited ₱ 500,000 in a bank that offers 6% per annum. You intend to withdraw
the money after 8 years. How much interest will you earn after 8 years?

Solution
Given: P = ₱ 500,000
r = 6%
t = 8 years
I =?
I =Prt
= (₱ 500,000) (0.06) (8)
= ₱ 240,000
At the end of 8 years, you would have earned ₱ 240,000 worth of money. Add it to
your deposit, you would have ₱ 740,000 in your bank account.
Example 2 (Simple Interest on Loans)
Masha borrowed ₱950,000 from a bank. The bank charges 12% simple interest per
year. How much interest will be added to her loan after 3 years?
Solution:
Given: P = P950,000
R = 12%
T = 3 years
I =Prt
= (₱ 950,000) (0.12) (3)
= ₱ 342,000

After 3 years, Masha must pay ₱ 342,000 interest. Add it to her loan, she will have to
pay ₱ 1,292,000 worth of money.

Compound interest – the interest on the first compounding period is added on the
principal, which will then be the basis for the interest to be computed for the next period.
It is important that you get familiar with compounding frequency. You will use m to
denote the compounding frequency. See the table provided on the next page.

Compounding Frequency Value of m

Annually 1
Semi-annually 2
Quarterly 4
Monthly 12
Bi-monthly 24
Weekly 52
Daily 365

You will use this formula in order to compute for compound interest.

I =¿

Example 3 (Compound Interest on Deposits)

Suppose you decided to deposit ₱480,000 in another bank that offers 6%
compounded semi-annually. How much interest would you earn after 5 years?
Solution:
Given: P = ₱480,000
r = 6%

RO_Business Mathematics_Grade 11_Q3_LP 8 5

 t = 5 years
m = 2 (semi-annually)
I =¿
I =¿
I =¿
I =[₱ 480,000(1.343916379)]−₱ 480,000
I =₱ 645,079.86−₱ 480,000
I =₱ 165,079.86
After 5 years, you would have earned P165,079.86 interest in a bank that offers
semi-annual compound interest.
Utilities and Services – these are products/schemes that make business
transactions easy and comfortable. However, a certain amount must be paid in exchange
for the services offered.

Example 4
Pure Waters is the only distributor of potable water in the locality. Your family
received ₱ 678.40 water bill for May with due date on June 5. A 10% penalty is charged for
delayed payment. If you pay 3 days after the due date, how much is the penalty? How
much is your total expenditure on water consumption for the month?

Solution:
Penalty = (₱678.40) (0.10)
= ₱67.84

Total expenditure = ₱ 678.40 + ₱ 67.84

= ₱ 746.24

Mortgages
A mortgage loan uses property as collateral. The lender usually requires a down
payment for the loan. The down payment represents a certain percentage of the purchase
price of the property.
Example 1
Assume that you wish to purchase a second-hand motor bike worth ₱44,000 and the
seller requires 20% down payment. How much would your initial cash out be? Find the
amount of the mortgage?

Solution:
Remember that down payment is a percentage of the purchase price. To compute for
the down payment:

Down payment = (Purchase price) (Down payment rate)

= (₱44,000.00) (20%)
= ₱8,800.00
The amount of the mortgage loan is the balance after paying the down payment:
Mortgage loan = Purchase price - Down payment
= ₱44,000.00 - ₱8,800.00
= ₱35,200.00
Example 2

RO_Business Mathematics_Grade 11_Q3_LP 8 6

 Mr. Guevarra decided to borrow ₱1,500,000 to buy a residential lot. The effective
rate of interest is 7.5%. The loan must be paid in full in one year. How much must Mr.
Guevarra pay after one year? How much interest is paid by Mr. Guevarra after one year?

Solution:
Given:
P (loan’s initial amount) = ₱1,500,000
i (interest rate) = 7.5%
n (total number of payments) = 1
Find: F (total amount due after maturity) = ?
I (total amount of interest paid) = ?
F = P (1 + i)n
= ₱1,500,000 (1 + 7.5%)1
= ₱1,500,000 (1 + .075)1
= ₱1,500,000 (1.075)
= ₱1,612,500

The amount P1,612,500 must be paid by Mr. Guevarra after one year.
To compute for interest, we simply deduct the loan’s initial amount from the maturity
value.
I =F−P
I =¿₱1,612,500.00 - ₱1,500,000.00
I =₱ 112,500.00

Interest and Amortization

A loan is amortized if both the principal and interest are paid by a sequence of equal
periodic payments. If there were no interest rate, determining your periodic payment would
be simple. A bank, however, will collect interest in order to make money. The series of
payments made until the end of the loan term is your amortization.

Example 1 (Amortization on Loans)

Suppose you obtain ₱350,000.00 loan payable in 3 years. The bank charged you 5%
interest annually. However, payments must be made monthly. Determine your monthly
amortization.

Solution:
Before you proceed to the computation, it is important that you understand annual
percentage rate or APR. The 5% is APR. Since you will make monthly payments, you must
convert the 5% APR into a monthly rate.

You must divide 5% by 12 to get 0.416%. Your monthly rate is 0.416%. To determine
the monthly payment, use the following formula:

A=iP ¿ ¿

where A is the monthly payment

P is the loan’s initial amount
i is the monthly interest rate; and
n is the total number of payments

Going back to our example:

RO_Business Mathematics_Grade 11_Q3_LP 8 7

 [ ( 0.416 % ) ( ₱ 350,000.00 ) ](1+0.416 %)(12)(3)
A=
(1+0.416 %)(12 )( 3)−1
[ ( 0.00416 )( ₱ 350,000.00 ) ](1+0.00416)36
A=
(1+0.00416)36−1
(₱ 1456.00)(1.161194667)
A=
0.161194667
A=₱ 10,488.56
Amortization Schedule
An amortization schedule is a table which shows the division of each payment into
principal and interest, together with the outstanding loan balance after each payment is
made. This part of the module will help you construct an amortization schedule using two
repayment programs namely:

1. Equal Principal Payments- under this arrangement, the loan is repaid in equal amounts
of principal. The installments are unequal, however, because the interest payment is
largest in the first year and becomes smaller as the principal is gradually paid.

2. Equal Amortization- the loan is repaid in equal installments. The amount applied to
principal is smallest in the first year, then the same payments to principal gradually
increases through the payment years, the largest of which is made on the last year. The
decreasing payments on interests, however, equalizes the uneven payments on
principal.

Example 1 (Equal Principal Payments)

Assume a ₱ 120,000 loan payable in 12 years at 8% annual interest. Construct an
amortization schedule using the equal principal payments program.

Solution:
The amortization schedule will be constructed using the following steps:
Step 1. Determine the amount of principal repaid each period by dividing the principal by
the number of payments
For the above example, it would equal to ₱ 120,000 ÷ 12 years = ₱ 10,000.
Step 2. Multiply the periodic interest rate by the outstanding balance at the beginning of
year to determine how much of this payment will go toward interest.
For the first row, ₱ 120,000 x 8% = ₱ 9,600
Step 3. Add the principal portion to the interest portion to determine the total payment for
the period.
For the first row, ₱ 10,000 + ₱ 9,600 = ₱ 19,600
Step 4. Go to the next row and repeat only steps 2 through 4.

Below is the illustration of the equal principal payment scheme above.

Outstanding principal Repayment of principal Interest due at Total payment

Year
at beginning of year at end of year end of year at end of year
1 ₱ 120,000.00 ₱ 10,000.00 ₱ 9,600.00 ₱ 19,600.00
2 110,000 10,000.00 8,800 18,800

RO_Business Mathematics_Grade 11_Q3_LP 8 8

 3 100,000 10,000.00 8,000 18,000
4 90,000 10,000.00 7,200 17,200
5 80,000 10,000.00 6,400 16,400
6 70,000 10,000.00 5,600 15,600
7 60,000 10,000.00 4,800 14,800
8 50,000 10,000.00 4,000 14,000
9 40,000 10,000.00 3,200 13,200
10 30,000 10,000.00 2,400 12,400
11 20,000 10,000.00 1,600 11,600
12 10,000 10,000.00 800 10,800

Example 2 (Equal Amortization Payments)

Assume a ₱ 120,000 loan payable in 1 year at 8% annual interest compounded
monthly. Construct an amortization schedule using the equal amortization payments
program.

Solution:
The amortization schedule will be constructed using the following steps:

Step 1. Determine the amount of amortization payment for each period using this formula:

8%
A=iP ¿ ¿ ; i= =0.667 %
12
[ ( 0.667 % ) ( ₱ 120,000.00 ) ](1+0.667 %)(12)(1)
A=
(1+0.667 %)( 12)( 1)−1

[ ( 0.00667 )( ₱ 120,000.00 ) ](1+0.00667)12

A=
(1+0.00667)12−1
(₱ 800.40)(1.083042541)
A=
0.083042541
A=₱ 10,438.83

For the above example, the monthly amortization is equal to ₱ 10,438.83. The
outstanding balance at the beginning of the month shall decrease by ₱ 10,438.83.

Step 2. Multiply the periodic interest rate by the outstanding balance at the beginning of
month
to determine how much of this payment will go toward interest.
For the first row, ₱ 120,000 x 0.00667 = P800.40

Step 3. Subtract the interest portion from the total payment at the end of the month to
determine the amount of principal paid for the period.
For the first row, ₱ 10,438.83 – ₱ 800.40 = ₱ 9,638.43

Step 4. Go to the next row and repeat only steps 2 through 4.

Below is the illustration of the equal amortization payment scheme above.

RO_Business Mathematics_Grade 11_Q3_LP 8 9

Month Outstanding principal at Repayment of principal Interest due at Total payment at
beginning of the month at end of the month end of the month end of the month
1st ₱ 120,000.00 ₱ 9,638.43 ₱ 800.40 ₱ 10,438.83
2nd 109,561.17 9,708.05 730.77 10,438.83
3rd 99,122.34 9,777.68 661.15 10,438.83
4th 88,683.51 9,847.31 591.52 10,438.83
5th 78,244.68 9,916.94 521.89 10,438.83
6th 67,805.85 9,986.56 452.27 10,438.83
7th 57,367.02 10,056.19 382.64 10,438.83
8th 46,928.19 10,125.82 313.01 10,438.83
9th 36,489.36 10,195.45 243.38 10,438.83
10th 26,050.53 10,265.07 173.76 10,438.83
11th 15,611.70 10,334.70 104.13 10,438.83
12th 5,172.87 10,404.37 34.50 10,438.83

Practice Exercises
1. Find the break-even point in units and in peso given that the unit price of a certain
commodity is ₱ 15.00; variable cost, ₱ 5.00; and total fixed cost, ₱ 12,000.
2. Grace merchandising’s variable cost per unit is P8.00. The company’s rent expense
is P4,000.00; salaries expense is P8,000.00 and bank loan amortization is
P4,000.00. If the company sold a total of P20,000.00 units yielding a total sale of
P200,000.00, find the BEP in units and BEP in pesos.
3. A polo costs Mr. Moreno P150.00 and he decides to mark it up by 20% of the selling
price. Find the selling price and mark-up for the said polo.
4. During a Grand Sale, a Nike sneaker regularly priced at P5,000.00 was sold at 55%
discount. The cost of the Nike sneaker is P3,540.00 and expenses are 12% of the
regular selling price.
a. How much is the selling price of Nike sneaker?
b. What was the amount of the mark-down?
c. What was the rate of mark-down?
5. A ₱ 7,800,500 loan was granted to Hyae Photography. The loan carries 9% annual
interest compounded quarterly for 3 years. Prepare an amortization schedule using
the equal amortization payment program. Use the table below as your guide.

Outstanding principal Repayment of Interest due at Total payment

Instalment
at beginning of the principal at end of end of the at end of the
Period
period the period period period
1st ₱ 7,800,500.00 ₱ ₱ ₱
2nd
3rd
4th
5th
6th
7th
8th
9th
10th
11th
12th

RO_Business Mathematics_Grade 11_Q3_LP 8 10

 Evaluation
1. Big Sister company’s variable cost per unit is ₱ 5.00. The company’s salaries expense
for its employees is ₱ 6,000 and leasehold expense of ₱ 4,000. The unit price of their
main commodity is ₱ 13. Find the BEP in units and BEP in pesos.
2. The company’s variable cost per unit is ₱ 7.00 and total fixed cost is ₱ 9,000.00. if the
company sold a total of 10,000 units yielding a total sale of ₱ 150,000.00 ,find the
break-even point in units and in peso.
3. Naga Supermart paid P12,000 for a set of dishes. Expenses are 10% of the selling
price while the required profit is 15% of the selling price. During an inventory sale, the
set of dishes was marked down by 30%.
a. What was the regular selling price?
b. What was the sale price?
c. What was the profit or loss?
4. What is the amortization payment for a P500,000.00 loan which carries 12% annual
interest compounded monthly for 3 years?
5. A P30,000.00 loan was granted to a janitor carrying 6% interest compounded monthly
payable in a year. Prepare for him an amortization schedule using the equal principal
payments scheme. Use the table below as you guide.
Outstanding principal at Repayment of principal Interest due at end Total payment at
Month
beginning of the month at end of the month of the month end of the month
1 P30,000.00 P P P
2
3
4
5
6
7
8
9
10
11
12

Answer Key
Practice Exercises
1. The break-even point BEP in number of units would be:
X= FC
(P-v)
BEP in Units (x) = P12,000.00 = P12,000.00 =1,200.00 units
P 15-5 P10
 The break- even point BEP in pesos would be:
BEP in Pesos = Unit Price x BEP in Units
BEP in Pesos = 1,200 units x P15 = P18,000.00
2. The break-even point BEP in number of units would be:
X= FC
(P-v)
Unit Price = P200,000/20,000 units
= P10.00
BEP in Units (x) =P16,000 = P16,000 = 8,000 units

RO_Business Mathematics_Grade 11_Q3_LP 8 11

 P10-8 2
 The break-even point BEP in pesos would be:
BEP in Pesos = Unit Price x BEP in units
BEP in Pesos = 8,000 units x P 10 = P80,000
3. 100% - 20% = 80% (Cost of polo is 80% of the selling price.)
C = 0.80S
150 = 0.80S
S = 150/.80
= P187.50
Mr. Moreno sells the polo at P187.50
MU = S – C
MU = P187.50 – P150.00
MU = P37.50
The mark-up on the polo is P37.50

4. A. 100% - 55% = 45% (the sale price is 45% of the selling price)
SP = 0.45 X S
= 0.45 X P5,000.00
= P2,250.00
The sale price of the Nike sneaker is P2,250.00

B. CTOTAL =C+E
= 3,540.00 + 0.12 X P5,000.00
= P4,140.00
P = SP – CTOTAL
= 2,250 – 4,140
= P1,890.00 (Loss)
The loss made on the sale was P1,890.00

C. Markdown rate = 1,890.00 / 2,250.00

= 84%
5.
Outstanding Repayment Interest due at
Total payment at
Instalment principal at of principal at end end of the period
end of the period
Period beginning of the of the period (col 2 x
(col 3 + col 4)
period (col 4 - col 3) 0.0225)
1st P7,800,500.00 P573,472.49 P175,511.25 P748,983.74
2nd 7,051,516.26 590,324.62 158,659.12 748,983.74
3rd 6,302,532.52 607,176.76 141,806.98 748,983.74
4th 5,553,548.78 624,028.89 124,954.85 748,983.74
5th 4,804,565.04 640,881.03 108,102.71 748,983.74
6th 4,055,581.30 657,733.16 91,250.58 748,983.74
7th 3,306,597.56 674,585.29 74,398.45 748,983.74
8th 2,557,613.82 691,437.43 57,546.31 748,983.74
9th 1,808,630.08 708,289.56 40,694.18 748,983.74
10th 1,059,646.34 725,141.70 23,842.04 748,983.74
11th 310,662.60 741,993.83 6,989.91 748,983.74
12th 0 0 0 0

Reflection

RO_Business Mathematics_Grade 11_Q3_LP 8 12

 I have learned that ____________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________

I wish to ask my teacher about __________________________________________

_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
References
1. Business Mathematics by Norma D. Lopez-Mariano, PhD
2. Business Mathematics Teaching Guide for Senior High School
3. Business Math Textbook (Government Property) Copyright @ 2016 by Vibal
Group, Inc and Brian Roy C. Lopez, Leah C. Martin-Lundag, and Keneth Adrian
Dagal. Pages 72-77 ,96-101
4. Business Mathematics by Norma D. Lopez-Mariano, PhDABM – Accountancy,
Business and Management K12 First Edition Pages 128-130
5. The Commission on Higher Education in collaboration with the Philippine Normal
University Teaching guide for Senior High School K-12 Business Mathematics pages
67-99.

Development Team

Writer: EMMYLOYD C. BIERSO, T-II

Editors/Reviewers: PAULO C. MOJOS, T-II

MARIA ASUNCION T. BRIZUELA, T-II
REYNALDO C. CAÑEZO JR., MT-I
JULMA B. CARGULLO, MT-I
DIOLETA B. BORAIS, EPS 1 MATHEMATICS

Layout Artist: ROSE ANN B. FLORENCIO, SST-I

RO_Business Mathematics_Grade 11_Q3_LP 8 13