BUSINESS MATH WEEK 7 – MARK-ON, MARK-
DOWN, MARK-UP, MARGIN
- Consumers want the prices of products as
low as possible
- Sellers periodically lower the prices of
goods to encourage bulk buying
- Things to be considered in setting the
selling price (product cost, profit,
consumer preference, competition)
 MARK-UP – added amount to the cost to
determine the selling price
- the sum of additional expenses and the
profit
- can either be a mark-on or margin
FORMULA: S = C + Mup
S = Selling Price
C = Cost
Mup = Mark-up [Mark – on (Mo) or Margin
 MARK-ON – computed mark-up based on
cost
FORMULA = Mo = (Rmo)(C)
Mo = Mark on or Mark up based on cost
Rmo = mark on rate
C = cost
 MARGIN – computed mark-up based on the
selling price
FORMULA: Mm = (Rmm)(S)
Mm = Margin
Rmm – Margin rate
S = Selling Price
 MARK-DOWN – the difference between the
old selling price and the new selling price
- Computed by multiplying the old selling
price by the rate of mark-down
PROFIT – when there is an amount left after
deducting cost and expenses
- Revenue>cost: revenue must be greater
than cost in order to gain profit
- Can lead to business growth
LOSS – when there is not enough money to
cover all expenses incurred
- Revenue<cost: revenue is less then cost
- Can cease the operations of the business
FORMULA FOR PROFIT AND LOSS:
 P=R–C
P = Profit
R = Revenue
C = Cost
Note: using the formula, if the result is positive
then the answer is profit. If the result is negative,
therefore there is a loss and the explanation must
be negated
PROFIT/LOSS PERCENTAGE
Formula: P% = (p/c) 100%
L% = (L/C) 100%
REVENUE – the amount of money the firm
receives for the sale of goods or payment of
services rendered
COST – the amount of money the firm pays for
production or the expenses they spent for the
product they offer
PROFIT – the difference between revenue and
cost
LESSON 9: BREAKEVEN
FUNCTION NOTATIONS
P(x) = Profit Function
R(x) = Revenue Function
C(x) = Cost Function
GENERAL FORMULA
- P(x) = R(x) – C(x)

TYPES OF COSTS
1. Fixed Cost – necessary expenditures that
remain the same no matter how much of
the product is manufactured or sold
2. Variable Cost – changes directly with the
amount of product produced or sold

COST FUNCTION FORMULA

- C(x) = V(x) + FC(x)
Where: C(x) = Cost Function
V(x) = Variable Cost
FC(x) = Fixed Cost
NOTE: fixed cost is always bigger than the
variable cost. Also, to recognize variable cost
easier, the term “for each” is usually used

BREAKEVEN POINT
R(x) = C(x)