Senior High School

Business
Mathematics
Quarter 1 – Module 6.1:
Margin and Mark-up

Writer:
PATRICIA ANN M. QUIAMBAO
Special Science Teacher I - San Juan High School (Mexico)
Editors:
JANE P. VALENCIA, Ed.D. – EPS – Mathematics (CHAIRMAN)
CHARIZEL T. ARCILLA – SPST-I Malino National High School
JHOANNA S. MANALOTO – T-II San Juan High School (Mexico)
 What I Need to Know

This will give you an idea of the skills or competencies you are expected to learn
in the module.

After going through this module, you are expected to:

• differentiate mark–up from margins; and
• describe how gross margin is used in sales.

What I Know

This part includes an activity that aims to check what you already know about
the lesson to take. If you get all the answers correct (100%), you may decide to skip this
module.

Direction: Choose the letter of the correct answer. Write the letter of your answer on a
separate sheet of paper. Show your solution.

1. What do you call the difference between the amount of sales and the cost of
goods sold?
a. Margin
b. Mark-up
c. Cost
d. Selling Price

2. If the cost is ₱80.00 and the selling price is ₱120.00, what is the rate of mark-
up?
a. 33.3%
b. 45%
c. 24%
d. 50%

3. If the cost is ₱60.00 and the selling price is ₱150.00, what is the rate of margin?
a. 26.5%
b. 60%
c. 45%
d. 70%

4. A convenience store buys one-gallon jug of milk for ₱149.50 and sells them for ₱
214.50. What is the margin they earn on the milk?
a. 30.30%
b. 43.48%
c. 69.69%
d. 74.34%

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 5. Which of the following refers to the profit based on the selling price?
a. Cost of goods sold
b. Margin
c. Mark-on
d. Mark-up

6. Mark up refers to the profit based on ________.

a. Selling Price
b. Sales
c. Discount
d. Cost

7. Patrick purchased a particular item for ₱250.00 and he wants a 25% mark-up,
how much will he sell the item?
a. ₱311.50
b. ₱312.00
c. ₱312.50
d. ₱313.00

For numbers 8 – 15, complete the table below. Write your answer on a separate sheet
of paper. Choose your answer from the box.

a. 17.65 % b. 33.33 % c. ₱ 680.00 d. ₱ 1,250.00

e. 28.87% f. 15% g. 22.40% h. ₱ 100.00

Selling Price Cost Mark-up % Mark-up % Margin

₱ 300.00 ₱ 200.00 8. ___________ 50% 9. ___________

₱ 800.00 10. __________ ₱ 120.00 11. __________ 12. __________

13. __________ ₱ 970.00 ₱ 280.00 14. __________ 15. __________

3
 Lesson

1 Margin and Mark-up

In this lesson, you are going to take a look at mark-up versus margin. While
they are very similar in nature, they have a big difference that could be costing you
loads of profit. By learning their difference, you could increase your profit and get you
one step closer to your goals.

What’s In

Traders or retailers sometimes confuse margin and mark-up. Understanding

both terms are very important because it will help them determine how much profit
they want to earn or make. Setting the prices of their products or items accordingly
can only happen if they know how much profit they want to make. If they want to grow
their business and profits, this module will help them get there.

Let’s have a short review about your previous lesson by reading and analyzing
each worded problems below. Write your solution and final answer on a different sheet
of paper.

1. JC bought an item that costs ₱ 3400.00. He decided to sell it with 5% mark-up.

How much will he sell the item?

2. A retailer is selling a phone with 12% mark-on. How much is the selling price if
the phone costs ₱ 19,990.00?

3. Haley bought a tablet for ₱ 15,952.00 but later decided to sell it at ₱18,000.00.
How much is the mark-up?

4. Raymond is a trader that sells laptops with 30% mark-on. If a laptop costs
₱24,980.00, how much is the mark-on?

5. Mr. Sarmiento owns a shop that sells different brands of printers. One
particular printer costs ₱ 7,398.00. If he wants a mark-on of ₱ 2,575.00, how
much will he sell the printer?

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 What’s New

Let’s Help Noelle!!

Noelle is a grade 11 ABM student. Her teacher gave her an extra activity about
Margin and Mark-up because she is facing some difficulties understanding it. Let’s
help her answer the activity!

A trader bought a bag that costs ₱650.00. She sells it for ₱1,100.00.

a. How much is the gross margin?

b. How much is the mark-up?

c. What is the % mark-up?

d. What is the % margin?

What is It

Margin a.k.a. Gross Margin

- is selling price minus the cost of goods sold (cost). Using the activity above, the
bag sells for ₱ 1,100.00 and the cost is ₱ 650.00, subtracting them we will get
the gross margin which is ₱ 450.00. The gross margin is also the gross profit or
mark-up.
- stated as percent, the margin percentage or % margin is 40.91%.
mark-up
% Margin = x 100
selling price

₱ 450.00
% Margin = x 100
₱ 1,100.00

% Margin = 0.4091 x 100

Mark-up based
% Margin = 40.91%
on selling price.

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Mark-up

- is the amount by which the cost of a product or item is increased in order to

come up with the selling price. On the activity above, a mark-up of ₱ 450.00 is
added to the ₱ 650.00 cost to get ₱ 1,100.00 selling price.
- stated as percent, the mark-up percentage or % mark-up is 69.23%.
mark-up
% Mark-up = x 100
cost
₱ 450.00
% Mark-up = x 100
₱ 650.00
% Mark-up = 0.6923 x 100
Mark-up based % Mark-up = 69.23%
on cost.

Margin is addressing the profit based on the selling price, while mark-up
addresses the profit based on cost.

Notice that the mark-up based on selling price (margin) is lower (40.91%)
compared to mark-up based on cost (69.23%) although our mark-up in pesos remains the
same (₱450.00). This is the main reason why traders or retailers usually express their
mark-ups based on selling price (margin) to make it seem like they have lower mark-up
or gross profit.

The mark-up in percent can be expressed as either based on selling price or based on
cost.

Mark-up Based on Selling Price (Margin)

Mark-up is based on selling price if the selling price is taken as 100%, it being
the base(B).

Selling price ……………………….. ₱ 1,100.00 100%

Cost ………………………………….. - ₱ 650.00 - 59.09%
Mark-up ……………………………… ₱ 450.00 40.91%

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 To express the cost and the mark-up in percent, the selling price is used as the
base.
cost
Cost as % of Selling Price = x 100
selling price
numerator denominator ₱ 650.00
= x 100
₱ 1,100.00

= 0.5909 x 100

= 59.09%
P
mark-up R=
Mark-up as % of Selling Price = x 100 B
selling price
numerator denominator ₱ 450.00
= x 100
₱ 1,100.00

= 0.4091 x 100

= 40.91%

Let’s say a trader wants a 20% mark-up on an item based on selling price, he or
she needs to subtract 20% from 100% to get his or her cost as rate of selling price,
which is equal to 80%. With this, he or she can determine his or her selling price. Let’s
say that the cost is ₱ 500.00.

Selling price ……………………….. ₱ ? 100%

Cost ………………………………….. - ₱ 500.00 - 80%
Mark-up ……………………………… ₱ ? 20%

P
To get the Selling Price, we will use B =
R
cost
Selling Price =
cost as % of selling price

₱500.00
=
0.80
= ₱625.00

To get the Mark-up, we will use P = BR

Mark-up = (Selling Price) (Mark-up as % of Selling Price)

= ₱625.00 x 20%

= ₱625.00 x 0.20

= ₱125.00

Hence,

Selling price ……………………….. ₱ 625.00 100%

Cost ………………………………….. - ₱ 500.00 - 80%
Mark-up ……………………………… ₱ 125.00 20%

7
Mark-up Based on Cost (Mark-up)

In some instances, mark-up is expressed as a percent of cost. In this case, the

cost is the base, hence, 100%.

Cost …………………………………… ₱ 650.00 100%

Mark-up …………………………….+ ₱ 450.00 + 69.23%
Selling price ……………………….. ₱ 1,100.00 169.23%

To get the corresponding percent for the selling price and the mark-up, we will
use the cost as the base.

selling price
Selling Price as % of Cost = x 100
cost
numerator denominator ₱ 1,100.00
= x 100
₱ 650.00
= 1.6923 x 100
P
= 169.23% R=
B
mark-up
Mark-up as % of Cost = x 100
cost
numerator denominator = 0.6923 x 100

= 69.23%

Using the same example above, if the trader purchased the item for ₱ 500.00
and he or she wants a 30% mark-up based on cost, he or she can determine the
selling price.

Cost …………………………………… ₱ 500.00 100%

Mark-up …………………………….+ ₱ ? + 30%
Selling price ……………………….. ₱ ? 130%

To get the Selling Price, we will use P = BR

Selling Price = (Cost) (Selling Price as % of Cost)

= ₱ 500.00 x 130%

= ₱ 500.00 x 1.30

= ₱ 650.00

To get the Mark-up, we will use P = BR

Mark-up = (Cost) (Mark-up as % of Cost)

= ₱ 500.00 x 30%

= ₱ 500.00 x 0.30

= ₱ 150.00

Hence,

Cost …………………………………… ₱ 500.00 100%

Mark-up …………………………….+ ₱ 150.00 + 30%
Selling price ……………………….. ₱ 650.00 130%

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 What’s More

Activity 1. Mark-up Based on Selling Price

Complete the table below. Use a different sheet of paper for your solution and answer.
Selling Price Cost Mark-up % Mark-upselling price

₱ 400.00 ₱ 350.00 1. _______________ 2. _______________

₱ 950.00 3. ______________ ₱ 125.00 4.________________

5. ________________ ₱ 900.00 6. ________________ 28 %

₱ 2,380.00 7. ________________ 8. ________________ 11.76 %

9. ________________ ₱ 2,500 ₱ 300.00 10. ______________

Activity 2. Mark-up Based on Cost

Complete the table below. Use a different sheet of paper for your solution and answer.
Selling Price Cost Mark-up % Mark-upcost

₱ 800.00 ₱ 550.00 1. _______________ 2. _______________

₱ 2,250.00 3. ______________ ₱ 550.00 4.________________

5. ________________ ₱ 1,030.00 6. ________________ 72.82 %

₱ 4,500.00 7. ________________ 8. ________________ 15.38 %

9. ________________ ₱ 2,800.00 ₱ 375.00 10. ______________

Activity 3. Worded Problems

Read and analyze the following problems. Write your solution and answer on a
separate sheet of paper.

1. The cost of a lipstick from the manufacturer is ₱ 350.00. If Pinky wants a 20%
mark-up based on selling price, how much will her selling price be?

2. If the cost of an item is ₱3,600.00 and it has a selling price of ₱4,450.00, what
is the % margin?

3. Refer to question number 2, what is the % mark-up?

4. An auto parts manufacturer sells fan belts to its distributor for ₱547.50. Typical
distributor mark-ups are 20%. How much would you have to pay for a fan belt?

5. Red is selling a necklace that costs ₱1,231.91. If she adds an 80% mark-up
based on cost, how much would a customer pay for it?

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 What I Have Learned

For the lesson summary, answer the following questions based on the discussion.
Write your answers on your notebook or on a separate sheet of paper.

1. What is gross margin?

___________________________________________________________________________

2. How do we obtain mark-up/profit?

___________________________________________________________________________

3. What is the difference between margin and mark-up?

___________________________________________________________________________

4. Why do traders express mark-ups based on selling price?

___________________________________________________________________________

5. Why does “rate of mark-up based on cost” bigger than “rate of mark-up based
on selling price?”
___________________________________________________________________________

What I Can Do

Noelle accepted the challenge!

It seems like Noelle understood the lesson very well. Her teacher wanted to
make sure that she can do an activity on her own that is why she asked her to answer
another example. Let’s answer the activity together with Noelle!

Lucas is a trader of laptops and cell phones. He purchased a particular

phone for ₱ 25,999.00.
a. How much is the selling price if he wants a 35% mark-up based on cost?
How much is the mark-up?
b. How much is the selling price if he wants a 35% margin? How much is the
gross profit?
c. If he is going to sell the phone for 30,000.00, what is the rate of mark-up
and rate of margin?

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 Assessment

Directions: Multiple Choice. Choose the letter of the best answer. Write the chosen
letter on a separate sheet of paper.

1. Which of the following is refers to profit based on the selling price?

a. Cost
b. Margin
c. Mark-up
d. Sales

2. Daniela is a trader who is selling laptops and printers. One particular brand of
printer that she is selling costs ₱ 6,800.00. If she wants a 15% mark-up based
on cost, how much will she sell the printer?
a. ₱ 6,920.00
b. ₱ 7,350.00
c. ₱ 7,820.00
d. ₱ 7,850.00

3. Janina bought a smart TV for ₱ 16,500.00 and sells it for ₱ 18,000.00. What is
his mark-up?
a. 9.09%
b. 11.25%
c. 12%
d. 13.08%

4. Kei sells a washing machine for ₱ 8,999.00, gaining 25% on his cost price. How
much did she pay for the machine?
a. ₱ 6,650.50
b. ₱ 6,799.80
c. ₱ 7,650.50
d. ₱ 7,199.20

5. Refer to question number 4, how much is Kei’s profit?

a. ₱ 2,348.50
b. ₱ 2,199.20
c. ₱ 1,799.80
d. ₱ 1,348.50

6. Which of the following is amount by which cost is increased in order to get the
selling price?
a. Cost
b. Margin
c. Mark-up
d. Sales

7. What formula will you use if you are looking for the Margin?
a. (mark-up ÷ selling price) x 100
b. (cost ÷ selling price) x 100
c. (selling price ÷ cost) x 100
d. (mark-up ÷ cost) x 100

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 8. What formula will you use if you are looking for the Selling Price as rate of cost?
a. (mark-up ÷ selling price) x 100
b. (cost ÷ selling price) x 100
c. (selling price ÷ cost) x 100
d. (mark-up ÷ cost) x 100

9. Carlo purchased an aircon that costs ₱ 27,990.00 and he wants a 27% margin.
How much will he sell it for?
a. ₱ 35,547.30
b. ₱ 38,342.47
c. ₱ 38,892.25
d. ₱ 39,795.45

10. Refer to question number 10, how much is the gross margin?
a. 11,805.45
b. 10,902.25
c. 10,352.47
d. 7,557.30

For number 11 – 15, complete the table below. Choose your answer from the box.

a. ₱ 640.00 b. 15.56% c. 7.24%

d. 18.42% e. ₱ 8,000

Selling Price Cost Mark-up %Mark-upsp %Mark-upcost

₱ 4,500.00 ₱ 3,800.00 ₱ 700.00 11. 12.

13. ₱ 7,360.00 14. 8% 8.70%

₱ 11,320.00 ₱ 10,500.00 ₱ 820.00 15. 7.81%

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 Additional Activities

Activity 1.
Answer the following. Write your solution and answer on a separate sheet of paper.

1. A trader bought an item for ₱ 15,590.00. Solve:

a. Selling price with 20% mark-up based on cost and based on selling price.
b. Amount of mark-up if the trader decided to sell the item for ₱ 21,000.00.
c. Rate of margin and rate of mark-up if the trader sells the item for
₱22,790.00.

2. Leo purchased an e-bike that costs ₱19,333.00.

a. If he added a mark-up of ₱5,000.00, what is the rate of margin? Rate of
mark-up?
b. How much is the selling price if he wanted a 10% mark-up based on cost?
c. How much is the selling price if he wanted a 10.97% margin?

Activity 2.

Complete the table below. Write your solution and answer on a separate sheet of
paper.

Selling Price Cost Mark-up % Mark-upcost % Mark-upsp

₱ 3,500.00 ₱ 3,000.00 ₱ 500.00 1.___________ 2. __________

₱ 670.00 3. __________ ₱ 120.00 4. __________ 17.91%

5. __________ ₱ 1,260.00 ₱ 375.00 29.76% 6. __________

7. __________ ₱ 2,800.00 ₱ 700.00 8. __________ 20%

₱ 5,100.00 ₱ 3,900.00 9. __________ 30.77% 10. _________

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 14
What I Know ACTIVITY 3 Additional
1) ₱437.50 2)19.10%
1)A 2)D 3)B 4)A 5)B 6)D Activities
7)C 8)H 9)B 10)C 11)A 3)23.61% 4) ₱657
ACTIVITY 1
12)F 13)D 14)E 15)G 5)₱2,217.44
1. a) ₱18,708; ₱19,487.50
What’s In b) ₱5,410
1) ₱3,570 2) ₱22,388.80 What I Can Do
c) 31.59%; 46.18%
3)₱2,048 4) ₱7,494 a) ₱35,098.65
5)₱9,973 2. a) 20.55%; 25.86%
₱9,099.65
b) ₱39,998.46 b) ₱21,266.30
What’s More
ACTIVITY 1 ₱13,999.46 c) ₱21,715.15
1) ₱50 2) 12.5% 3) ₱825 c) 15.39% , 13.34%
4) 13.16% 5) ₱1,250
6)₱350 7) ₱2,100 8) ₱280 ACTIVITY 2
9) ₱2,800 10) 10.71% Assessment 1) 16.67% 2) 14.29%
1)B 2)C 3)A 4)D 5)C 6)C 3) ₱550 4) 21.82%
ACTIVITY 2
1) ₱250 2) 45.45% 7)A 8)C 9)B 10)C 11)B 5) ₱1,635 6) 22.94%
3)₱1,700 4) 32.35% 12)D 13)E 14)A 15)C 7) ₱3,500 8) 25%
5)₱1,780 6) ₱750 7)₱3,900 9) ₱1,200 10) 23.53%
8) ₱600 9) ₱3,175
10)13.39%
Answer Key
 Development Team of the Module

Writer: PATRICIA ANN M. QUIAMBAO – SPST-I San Juan High School (Mexico)
Editor: JANE P. VALENCIA, Ed.D. – EPS – Mathematics
Reviewer: JANE P. VALENCIA, Ed.D. – EPS – Mathematics
CHARIZEL T. ARCILLA – SPST-I Malino National High School
JHOANNA S. MANALOTO – T-II San Juan High School (Mexico)
Illustrator: PATRICIA ANN M. QUIAMBAO – SPST-I San Juan High School (Mexico)
Layout Artist: PATRICIA ANN M. QUIAMBAO – SPST-I San Juan High School (Mexico)
Language Reviewer:

Management Team

ZENIA G. MOSTOLES, Ed.D., CESO V, Schools Division Superintendent

LEONARDO C. CANLAS, Ed.D., CESE. Asst. Schools Division Superintendent
ROWENA T. QUIAMBAO, CESE, Asst. Schools Division Superintendent
CELIA R. LACNALALE, Ph.D., CID Chief
JANE P. VALENCIA, Ed.D., Education Program Supervisor, Mathematics
JUNE E. CUNANAN, Education Program Supervisor/ Language Editor
RUBY M. JIMENEZ, Ph.D., Education Program Supervisor, LRMDS