Discounts, Profit, and Loss

Prepared By:

Mr. Christian Rae D. Bernales, LPT

I. Learning Objectives:
At the end of the lesson the learner should be able to;
1) Illustrate how to compute single trade discounts and discount series.
(ABM_BM11BS-Ih-5)
2) Differentiate profit from loss. (ABM_BM11BS-Ii-6)
3) Illustrate how profit is obtained and how to avoid loss in a given
transaction. (ABM_BM11BS-Ii-7)
4) Define break-even; illustrate how to determine break-even point.
(ABM_BM11BS-Ij-8)
5) Solve problems involving buying and selling products.
(ABM_BM11BS-Ij-9)

II. Development of the Lesson:

is an amount or percentage
that is deducted from the selling price of a product.
Retailers offers discount as
means of encouraging
customers to return to their store
or purchase their products often. Discounts
make take as a form of percentage.

is the total amount producers earn after

subtracting the production costs.

is made when the revenue from sales

is not enough to cover all the costs of production.
III. Lesson Proper

is a percentage from the list price of

a product that a manufacturer gives to resellers when they buy his or her
product. When the reseller pays for the product, he or she does not par the
list price.

Basic Formula:
Single Trade Discount = List Price ×Discount rate

Example:
Alex purchases 8 pairs of denim jeans at a discount of 25%. Which are
listed at a price of Php 1,200 per piece. How much does each denim jeans
cost?

Solution:
Listed Price = Php 1,200.00
Discount Rate = 0.25

Single Trade Discount = L × DR

= 1200 × 0.25
Single Trade Discount = Php 300.00

Discounted Price = L – STD

= 1200 – 300
= Php 900.00
It means that every Denim jeans cost Php 900.00. Since Alex purchases 8
denim jeans, therefore the total cost is Php 900.00 × 8 = Php 7,200.00.

1.) Dominic saved a total of Php 1,200.00 after a 15% discount was
given to all purchase, how much was his total purchase before
the discount?
 is expressed as a number of separate discounts.
The primary difference between a single trade discount and discount series
is that there are more conditions buyers must meet in a discount series to
take full advantage of the reduction.

In the single discount formula, the calculation is pretty straightforward.

For example, if the discount offered is 35% and the total value of the goods
sold are $100,000, the single discount formula would be:
$100,000 x 0.35 = $35,000 discount

In contrast to the single discount formula, however, the discount series

yields a lower discount. The effective 20/10/5 discount is found by
applying each discount successively.

Using the previous example,

The 20% discount reduces the $100,000 owed to $80,000;
The 10% discount reduces the remaining $80,000 to $72,000; and
The 5% discount reduces the remaining $72,000 owed to $68,400

Making the total discount equal to $31,600. As you can see, the discount
series would be $4,400 less than what was used applying the single
discount formula.

Example: let’s say you sell wholesale auto parts. You might offer a
20/10/5 split in which you provide a 20 percent discount as a promotion, a
10 percent discount if the client buys at a certain volume, and a five percent
discount if payment is made within 30 days. It’s important to remember,
however, that in a discount series the buyers won’t receive each discount
unless that specific condition is met. So in the above example, the buyer
would receive 20 percent off the top but would only receive the additional
10 percent if it bought a specific number of items, and the five percent if
the payment were made within 30 days. In that 20/10/5 split, the 20 percent
is taken off the entire purchase amount, while the 10 percent is deducted
from what remains, and the five percent deducted from what’s left over
after the 10 percent is deducted.
 1.) An appliance store offers a refrigerator at Php 14,000.00 with a
discount of 25%. To attract further buyers the same refrigerator
was given a 15% discount. How much does the refrigerator cost?

it is what occurred it is the amount left

when the cost and from the revenue (or
expenses exceed the sales) after all costs
revenue or sales. (or expeneses) had
been deducted. It is
also defined as a gain
in business.

Basic Formula:
Profit/Loss = Revenue – Cost

Note: The is a Profit if it is positive and Loss if it is negative.

In Symbols:
Revenue > Cost = Profit
Revenue < Cost = Loss

How to avoid Loss?

✓ Add new and innovative products and services in your company.
✓ Make use of modern technology that saves time, money and energy.
✓ Apply low price strategies.
✓ Optimize your website in an attractive way.
✓ Treat your business a business, not as a hobby or a side job.
Percent of Profit or Loss

𝑃𝑟𝑜𝑓𝑖𝑡
Profit Percent = (
𝐶𝑜𝑠𝑡
) × 100%

𝐿𝑜𝑠𝑠
Loss Percent = (
𝐶𝑜𝑠𝑡
) × 100%

Real-life Example:
Assume that you are in the business of buying and selling shoes. You
bought 10 pairs of running shoes for Php 3,500.00 each from a wholesaler
at the start of December. Then, you plan to sell these pairs of running shoes
online to your friends before Christmas. You were able to sell 7 pairs at
Php 5,000.00 each. However, after Christmas, you have 3 pairs left unsold.
You thought of selling the remaining pairs at Php 2,500 each to ensure that
you have sold all items before New Year.

Now, determine whether you earn a profit or incurred a loss. Provide

how much your profit or loss was.

Solution:
Given: Number of pairs of running shoes = 10 pairs
Cost per pair = Php 3,500.00
Selling price per pair = Php 5,000.00
Sale price = Php 2,500.00
Sold pairs = 7 pairs at Php 5,000.00 (before Christmas)
= 3 pairs at Php 2,500.00 (after Christmas)

Before Christmas, After Christmas,

Revenue = 7 × 5,000 = 35,000 Revenue = 3 × 2,500 = 7,500

Cost = 7 × 3,500 = 24,500 Cost = 3 × 3,500 = 10,500

Profit/Loss = 35,000 – 24,500 Profit/Loss = 7,500 – 10,500

Profit = 10,500 Loss = – 3,000
How much is the total profit?

Profit Before Christmas = Php 10,500.00

Loss After Christmas = Php 3,000.00

Total Profit = 10,500 – 3,000

Total Profit = Php 7,500.00

What is the profit percent?

𝑃𝑟𝑜𝑓𝑖𝑡
Profit Percent = (
𝐶𝑜𝑠𝑡
) × 100%
7,500
Profit Percent = (
35,000
) × 100%

Profit Percent = 21.43%

1.) A cloth merchant bought 35 shirts, each at a price of Php 280.00.

He sold each of them for Php 308.00. Find his percentage profit.

2.) An article is sold for Php 2,400.00 at a profit of 25 %. What would

have been the actual profit or loss if it had been sold at
Php1,800.00?

3.) A retail fruit vendor buys pineapples at a score for Php 200.00,
and retails them at a dozen for Php 156.00. Did he gain or lose in
the transaction and what percentage was his gain or loss?

4.) A man sells two chairs for Php 480.00 each. On one he makes a
profit of 20 % and on the other he makes a loss of 20 %. Find his
total loss/gain in these two transactions.
 it also determines the needed volume of
products that must br sold to attain a
balance between cost and revenue.

Break-even sales this refers to the

amount of product that must be
reached to attain a balance between
cost and revenue.

Basic Formula:
Break-even Sales = Selling price × Break-even Point

Real-life Example:
The United Sofa Comapany produces sofa chairs. The fixed monthly cost
of production is Php 470,000.00 and the variable cost per sofa is Php
6,200.00. The sofa chair sells for Php 10,500 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?

Solution:
Given: Fixed Cost = Php 470,000.00
Variable Cost = Php 6,200.00
Price = Php 10,500.00

How much is the Total cost? Make a Cost Function.

𝐶(𝑥) = 𝑉𝑥 + 𝐹
𝐶(𝑥) = 6200𝑥 + 470,000
𝐶(140) = (6200)(140) + 470,000
𝐶(140) = 𝑃ℎ𝑝 1,338,000.00

How much is the Total revenue? Make a Revenue Function.

𝑅(𝑥) = 𝑝𝑥
𝑅(𝑥) = 10,500𝑥
𝑅(140) = (10,500)(140)
𝑅(140) = 𝑃ℎ𝑝 1,470,000.00
How much is the Total profit? Make a Profit Function.
𝑃(𝑥) = 𝑅(𝑥) − 𝐶(𝑥)
𝑃(𝑥) = 10,500𝑥 − (6,200𝑥 + 470,000)
𝑃(𝑥) = 10,500𝑥 − 6,200𝑥 − 470,000
𝑃(𝑥) = 4,300𝑥 − 470,000
𝑃(140) = 4,300(140) − 470,000
𝑃(140) = 𝑃ℎ𝑝 132,000.00

How many sofa chairs must be sold in a month to break even?

𝑅(𝑥) = 𝐶(𝑥)
10,500𝑥 = 6,200𝑥 + 470,000
10,500𝑥 − 6,200𝑥 = 470,000
4,300𝑥 = 470,000
4,300𝑥 470,000
=
4,300 4,300
𝑥 = 109.30
𝑥 ≈ 110 approximately number of sofa chairs.

𝑃(𝑥) = 0
4,300𝑥 − 470,000 = 0
4,300𝑥 = 470,000
4,300𝑥 470,000
=
4,300 4,300
𝑥 = 109.30
𝑥 ≈ 110 approximately number of sofa chairs.

How much is the Total profit? Make a Profit Function.

𝐵𝑟𝑒𝑎𝑘 − 𝑒𝑣𝑒𝑛 𝑠𝑎𝑙𝑒𝑠 = 𝑠𝑒𝑙𝑙𝑖𝑛𝑔 𝑝𝑟𝑖𝑐𝑒 × 𝑏𝑟𝑒𝑎𝑘 − 𝑒𝑣𝑒𝑛 𝑝𝑜𝑖𝑛𝑡
𝐵𝑟𝑒𝑎𝑘 − 𝑒𝑣𝑒𝑛 𝑠𝑎𝑙𝑒𝑠 = 𝑃ℎ𝑝10,500 × 110
𝐵𝑟𝑒𝑎𝑘 − 𝑒𝑣𝑒𝑛 𝑠𝑎𝑙𝑒𝑠 = 𝑃ℎ𝑝1,155,000
 Solve the problem involving Gross Margin.
1.) Suppose a firm manufacturers hand towels and sells then for Php
75.00 each. If the costs incurred in the production and sale of the
hand towels are Php 200,000.00 plus Php 25.00 for each hand towel
produced and sold.
a) Write the revenue function, cost function, and profit
function.
b) Find the break-even point and break-even sales.

Solve problem involving Break-Even Point.

1.) costs a publishing company 50,000 dollars to make books. The 50,000
is a fixed cost or a cost that cannot change. To help the publishing
company sell the books, a marketing company charges 4 dollars for
each book sold. If the company charges 9 dollars per book, how many
books should they sell to break even?

2.) It costs a man 75 dollars to buy the things that he needs to make hot
dogs. The city allows him to sell his hot dog somewhere near the city
hall. However, the city hall charges him 1 dollar for each hot dog sold.
Calculate the break even point if the price he charges for 1 hot dog is
$1.50.

Reference: https://www.youtube.com/watch?v=yoPNW9qYfew&t=266s
https://www.youtube.com/watch?v=ubbYhsXzhjw
https://www.youtube.com/watch?v=Pf8j_7wT8KE