SHS

Business Mathematics
Quarter 1, Week 6 – Module 8
Differentiating Mark-up from
Margins- ABM_BM11BS-Ih-3

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Business Mathematics- SHS
Quarter 1, Week 6- Module 8: Differentiating Mark-Up from Margins

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Regional Director: Gilbert T. Sadsad

Assistant Regional Director: Jessie L. Amin

Development Team of the Module

Writer: EMMYLOYD C. BIERSO, ABM Teacher, TNHS

Editors: NERISSA A. MORTEGA, HT III, San Lorenzo NHS
JULMA B. CARGULLO, MT, TNHS
HILDA J. CARLET, MT, TNHS
Language Editors: CHERRY BASILLA, TNHS
DESIREE CANICULA, TNHS
Reviewers: DIOLETA B. BORAIS, EPS, Tabaco City
JINKY VILLAREAL, EPS, Iriga City
JONJON MONTER, Principal, Sagrada HS, Iriga City
LOYD BOTOR, EPS, RO V
Layout Artist: ROWENA B. BENOYO, San Lorenzo NHS

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 Business Mathematics- SHS
Quarter 1, Week 6- Module 8
Differentiating Mark-Up from Margins

I. Introduction

Are you familiar with merchandising business? Well, this is simply

called buying and selling. Probably, many of you are into this business. That
is, you buy items in volume, then sell it directly to customers. How did you
price the product? Did you earn an income or incurred a loss based on your
selling price?
In this module you will understand the difference between what we call
Margin and Mark-up. The module is composed of only one lesson, divided
into three learning activities.

Learning Activity No. 1 - Define what is Margin

Learning Activity No. 2- Define what is Mark-up
Learning Activity No. 3- Difference between Mark-up and Margin

II. What Will You Learn From This Module?

After this module, you should be able to:

● differentiate mark-up from margins

III. Vocabulary List

This module will help you understand the following:

• Margin - sales minus the cost of goods sold

• Mark-up - is the amount by which the cost of a product is
Increased in order to derive the selling price.

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IV. Pre-test:

Answer the following questions and show your computation.

1. Kenneth sold an item for P1,750.00, representing 180% based on
cost. Find:
A. Cost
B. Mark-up
C. Mark-up rate

2. If Dave purchased an item for P 980.00 and representing 65% based

on selling price. Find:
A. Selling Price
B. Mark-up
C. Mark-up rate

3. Crystal earned P 1,200.00 representing 25% based on selling price.

Find:
A. Selling Price
c B. Cost rate
C. Cost

How do you find the test? You will understand more of this, as
you move on to the discussion.

V. Learning Activities

Learning Activity No.1

GROSS MARGIN

Mae bought a table worth P 3,500.00. She sells the item to

her friend for P 4,000.00.

How much is the Gross Margin?

How much is the Mark-up?

You are to compute for the gross margin, but what does it mean?

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 MARGIN is also known as Gross Margin. It is Sales minus Cost of
Item sold.

The formula is:

Sales - Cost of Item sold = Margin

Thus, to compute the above problem:

Sales P 4,000.00
Minus: Cost P 3,500.00
Margin P 500.00

The P 500.00 Margin is the amount that you earned as it relates to Sales.

Stated in percent, let sales be the base or 100%

Margin based on sales
Sales P 4,000.00 100.00%
Minus: Cost P 3,500.00 87.50%
Margin P 5,00.00 12.50%

Take note: The 12.5% is the margin based on sales or the selling
price, calculated as the margin divided by sales.
The computation for the percentage will be further
discussed later.

Learning Activity No.2

MARK-UP

The same problem will be used for you to understand the difference
between Margin and Mark-up. For question number 2, you are about to
compute for the mark-up.

You already know that:

Mark-up is the amount by which the cost of a product is increased to

derive the selling price.

The formula:
Cost + Mark-up = Selling Price

To get Mark-up:
Mark-up = Selling Price - Cost

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 To answer the question how much is the mark-up, thus:

Cost P 3,500.00
Add: Markup 500.00
Selling Price P 4,000.00

The increase in the cost of P 3,500.00 to get the selling price of

P 4,000.00 is P500.00. This is the profit as it relates to cost.

Stated in percent, let cost be the base or 100%

Mark-up based on cost

Cost P 3,500.00 100.00%
Add: Markup 500.00 14.29%
Selling Price P 4,000.00 114.29%

Take note: 14.29% is the mark-up based on cost, calculated as

mark-up divided by the cost.

• Therefore, the MARGIN addresses the profit as it relates to

the selling price; whereas, the MARK-UP addresses the profit as it
relates to the cost price

Learning Activity No.3

PERCENTAGE OF MARK UP/MARGIN AS TO COST AND SELLING PRICE

1. Leo purchased an item for P 600.00. He then decided

to sell the item and wants a 30% mark-up based on cost.

How much is his selling price?

2. Leo sells the item for P 900.00 and earned a

margin of 25% based on the selling price.

How much is the cost?

In the previous discussion, you already learned that margin relates to

the selling price, making it as the base 100%, while mark-up relates to the
cost making cost as the base 100%.

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1. The question for number 1 is how much is the selling price.
Given in the problem are: Cost = P 600.00; Mark-up rate = 30%

Since the problem states that the mark-up is 30% based on cost,
let cost be 100%, therefore making the selling price as 130%.
Mark -up rate based on cost
Selling Price 780.00 130%
Cost 600.00 100%
Mark-up 180.00 30%

The rate of the selling price is computed by dividing the selling price
by the cost:
Selling price rate = Selling Price
Cost
= 780.00
600.00
= 130%

Selling price = Cost x 130%

= 600.00 x 130%
= P 780.00

2. The question for number two is, how much is the cost?

Given in the problem are: Selling Price = P 900.00; Margin rate = 25%

Since the problem states that the margin is 25% based on the selling
price, let selling price be 100%, therefore making cost as 75%.

Mark -up rate based on selling price

Selling Price 900.00 100%
Cost 675.00 75%
Markup 225.00 25%

The rate of the cost is computed by dividing the cost by the selling price.

Cost rate = Cost

Selling price

= 675.00
900.00
= 75%

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 Below is a summary of the percentage of mark-up either based on cost
or based on selling price.

Mark-up rate based on Margin rate based on

cost selling price
Selling Price 130% 100%
Cost 100% 75%
Markup 30% 25%

VI. Practice Exercises:

Practice Task 1

Complete the table. Show your answer in two decimal places.

No. Selling Price Cost Markup MU cost MU selling

price

1. P 7,500.00 ? P 350.00 ? ?
2. P 2,800.00 ? P 200.00 ? ?
3. ? P 285.00 ? 15% ?
4. P 125.00 ? ? ? 10%
5. P 670.00 ? ? ? 20%

Practice Task 2
Compute the following:

1. Karen is making ice candy. She bought the following ingredients:

5 packs of all purpose cream @ P 57.00
8 kg of white sugar @ P 53.00
1 kg of mango @ P 100.00
5 packs of ice candy plastic @ P 8.00
15 cans of evaporated milk @ P 24.00

A. How much is the total cost of the ingredients?

B. If Karen made 320 pcs of ice candy and sells them at P 5.00 per piece,
how much is the sales?
C. How much is the mark-up? What is the percentage of mark-up based
on the cost? How about the percentage of mark-up based on sales?

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 Practice Task 3

Answer the following:

Ricky has a rubber shoes that he doesn’t use anymore. It costs P

3,273.00. If Ricky wants to have a 30% margin based on selling price.
Find:
A. Margin
B. Selling Price
C. Cost rate

Let’s Remember

This module highlights the following points:

✓ Margin is sales minus the cost of goods sold. This is the profit as
it relates to selling price.
✓ Mark-up is the amount by which the cost of a product is
increased in order to derive the selling price. It addresses the
profit as it relates to cost price.
✓ Mark-up percentage can be computed either based on selling
price or based on cost.
✓ If mark-up percentage is based on cost, let the cost be the base
as 100%.
✓ If mark-up percentage is based on selling price, let the selling
price be the base as 100%

VII. Post- Test:

A. Answer the following. Show your computation.

No. Selling price Cost Markup MU Cost MU Selling Price

1. P 105.00 10%
2. P 235.00 P 55.00
3. P 150.00 17%
4. P 780.00 P 690.00
5. P 48.00 15%
6. P 230.00 24%
7. P 1,450.00 P 175.00
8. P 220.00 18%
9. P 650.00 P 590.00
10. P 370.00 12%

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VIII. Assignment:

1. Give at least five real-life situations showing how gross margin is

used in sales. You can cite samples through your own experiences
and try to show how gross margin is used.

ANSWER KEY

Pre test

1. Kenneth sold an item for P1,750.00, representing 180% based on cost.

Find:
A. Cost = 972.22 ( P 1,750.00 ÷ 180% )
B. Mark-up = 777.78 ( P 1,750.00 - P 972.22)
C. Mark-up rate = 80% ( P777.78 ÷ P 972.22)

2. If Dave purchased an item for P 980.00 and representing 65% based on

selling price. Find.
A. Selling Price = P 1,507.69 ( P 980.00 ÷ 65% )
B. Mark-up = P 527.69 ( P 1,507.69 - P 980.00)
C. Mark-up rate = 35% ( P 527.69 ÷ P 1,507.69)

3. Crystal earned P 1200.00 representing 25% based on selling price. Find

A. Selling Price = P 4,800.00 ( P 1,200.00 ÷ 25%)
B. Cost rate = 75% ( 100% - 25% )
C. Cost = P 3,600.00 (P 4,800.00 x 75%)

Practice Task 1
No. Selling Price Cost Markup MU cost MU selling price
1. P 7,500.00 P 7,150.00 P 350.00 4.90% 4.67%
2. P 2800.00 P 2,600.00 P 200.00 7.69% 7.14%
3. P 327.75 P 285.00 P 42.75 15% 13.04%
4. P 125.00 P 112.50 P 12.50 11.11% 10%
5. P 670.00 P 536.00 P 134.00 25% 20%

Practice Task 2
1. Cost
5 pack all purpose cream @ P 57.00 = P 285.00
8 kls. White sugar @ P 53.00 = P 424.00
1 kl. Mango @ P 100.00 = P 100.00
5 pack ice candy plastic @ P 8.00 = P 40.00
15 cans evaporated milk @ P 24.00 = P 360.00
P 1,209.00
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 A. How much is the total cost of the ingredients? = P 1,209.00
B. Sales = 320 x 5 = P 1,600.00
C.
Markup sales Markup cost
Sales P 1,600.00 100.00% 132.00%
Cost 1,209.00 96.09% 100.00%
Markup 391.00 3.91% 32.34%

Practice Task 3

A. Margin = P 981.90
B. Selling Price = P 3,273.00
C. Cost rate = 70%
Margin based on selling price
Selling Price = P 3,273.00 100%
Less: Cost = 2,291.10 70%
Margin = P 981.90 30%

Post Test

No. Selling price Cost Markup MU Cost MU Selling Price

1. P 105.00 P 94.50 P 10.50 11.11% 10%
2. P 290.00 P 235.00 P 55.00 23.40% 18.97%
3. P 1,032.35 P 882.35 P 150.00 17% 14.53%
4. P 780.00 P 690.00 P 90.00 13.04% 11.54%
5. P 320.00 P 272.00 P 48.00 17.65% 15%
6. P 285.20 P 230.00 P 55.20 24% 19.35%
7. P 1,450.00 P 1,275.00 P 175.00 13.73% 12.07%
8. P 1,222.22 P 1,002.22 P 220.00 21.95% 18%
9. P 650.00 P 590.00 P 60.00 10.17% 9.23%
10. P 3,453.33 P 3,083.33 P 370.00 12% 10.71%

REFERENCE

• * Lopez-Mariano, N. D. Business Mathematics 1st edition, pp. 115-121

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