Directorate: Curriculum FET

SUBJECT and GRADE MATHEMATICAL LITERACY

TERM 1 Week 5
TOPIC FINANCE: COST AND SELLING PRICE A WELL AS BREAK-EVEN ANALYSIS
AIMS OF LESSON The following will be focused on in terms of cost and selling price: What is cost price, selling price,
profit/loss and break-even point?
RESOURCES Paper based resources Digital resources
Refer to your Textbook: https://www.youtube.com/watch?v=b-IaKom1PJo
Consult: Finance – Cost and
Selling Price for more
information
INTRODUCTION  Cost and Selling price as well as Break-even analysis were covered in Grade 11. In Grade 12, this
section is consolidated.
 The main focus of this lesson plan will be the clarification of cost and selling price, profit as well as
relevant percentage calculations.
 The Break-Even-Analysis, the income and expense graph as well as descriptions, tables and formulas,
in other words, information of cost and selling price which can be represented in graphs, will be
covered.
CONCEPTS AND SKILLS The following skills and concepts are covered in this lesson plan:
 Cost price – The amount of money spends on buying or making a product. It also serves as a base
therefor it equates to 100%. (Running and production costs also determine the cost price)
 Selling price – The amount of money a customer is charged to buy a product.
 Profit/Loss -The relationship between the cost price and selling price
 Break-even point – It is the point where the income is equal to the expenses.
 Descriptions of income and expenses of an item, tables, formulas and graphs must be understood, set
up, and even represented.
ACTIVITIES/ASSESSMENT  The material consists of a lesson plan, with activities with notes and examples to work through.
 Study and work through the examples to guide you to do the activities 1 – 5.
 Break up the activities to be done over the week.
CONSOLIDATION  Supplement these activities with activities in your textbook.
 It is important to study previous papers to see questions that relates to the topic done now. By doing
 this, you will see how questions could be posed in the end-of-year-examination.
 Thank you for showing your first step of independent learning.
VALUES  To make responsible decisions and to be successful in the business world.

CONCEPTS AND
COST PRICE: + PROFIT / MARK UP
SKILLS
Cost price of a product is the cost of = SELLING PRICE:
manufacturing or buying a product by a Selling price = The selling price is the price at
business Cost Price + Profit which the product is sold

Factors determining cost price: Factors determining the selling

 Wholesale/Bulk price price
 Production/Manufacturing costs
 Operating costs  Cost price of the product
 Competitors price
 Profit required
Cost price =  Price the customer is prepared
Selling Price - Profit to pay

Profit =
Selling Price – Cost Price

+ PROFIT / MARK UP

COST PRICE OF PRODUCT: + R13

SELLING PRICE:
Factors:
-Roll’s price (R12 + R13) = R25
-Sausage price
-Sauce’s price
-Braai costs

Cost Price of a Sausage Roll = R12

 PERCENTAGE PROFIT/MARK UP
COMMON MISTAKE!
Profit Selling Price −Cost Pice
in terms of reverse = × 100% OR ×
percentage calculations: Cost Price Cost Price
Cost price = 60% of R30 100%
= R18 13 25−12
= × 100% OR × 100%
= R30 – R18 12 12
= R12 PERCENTAGE
CALCULATIONS: ADD A GIVEN PERCENTAGE PROFIT TO THE
If you test:
12× 1,6 = R19,20 COST PRICE TO DETERMINE THE SELLING
WRONG! If you have a fixed total for PRICE:
example a Question Paper is out If a percentage profit or mark up of 66,67% is added
R18,75 × 1,6 = R30 of a total of 150 marks. The on the cost price, what will the selling price be?
CORRECT! maximum mark you can obtain is Selling Price = R12 + 12 × (66,67 ÷ 100)
150 marks, thus 100% is the = R20,00
maximum percentage mark. OR
Selling Price = 12 × (66,67 ÷ 100 or 0,6667) = R8,00
BUT = R12 + R8 = R20
for example, in financial contexts OR
you will get percentages of more Selling Price = R12 × (100% + 66,67%)
than 100%. = R12 × (166,67 ÷ 100)
= R12 × 1,6667
The cost price represents 100%
because it serves as the base.
Selling price = Cost price + Profit REVERSE PERCENTAGE CALCULATION:
= 100% + 25% FROM SELLING PRICE TO COST PRICE
= 125% If the selling price is R30 and the profit/mark up is 60%,
or 1,25 as a decimal calculate the cost price.
Selling price = R30
= Cost Price + Profit / Mark Up
COMPARE! = 100% + 60%
Thus R30 = 160%
Cost Price = 30 ÷ 1,60
= R18,75
ACTIVITIES ACTIVITY 1

1. The selling price of a stove is R2 999. The profit is R1 200.

1.1 Calculate the cost price.
1.2 Calculate the percentage profit.

2. When selling a book, a bookstore makes a profit of 30%. If the selling price of the book is R250,
calculate the cost price of the book.
NB: Note the difference
between percentage 3. Mbu buys key rings for R5,00 each and coffee mugs for R9,00 each.
profit and profit He sells each key ring for R10 and each mug for R15,00.
margin:
3.1 Determine, which item has the highest percentage profit.
PERCENTAGE
PROFIT/MARK UP 3.2 Mbu’s income for the items sold is given in the following table:
Profit
= × 100% Item Sold Items sold per day
Cost Price
Day 1 Day 2 Day 3 Day 4 Day 5
PROFIT MARGIN Key Ring 150 200 180 240 220
Total Profit Coffee Mug 300 270 180 225 285
= × 100%
Total Income
3.2.1 Jenny stated that Mbu sold more key rings than coffee mugs. Verify, showing all calculations
if her statement is valid.
NB: Follow the 3.2.2 Verify, showing all calculations which item has the biggest profit margin.
procedure of how to Total Profit
Use the following formula: Profit Margin = × 100%
add a given Total Income
percentage profit to
cost price to 4. Shaheeda wants to make a profit of 150% on a koesister. The cost price of ONE koesister is 80c.
determine the selling Calculate the selling price in Rand of ONE koesister.
price.
 BREAK-EVEN ANALYSIS:
 Break – even is the point at which the income equals the expenses.
 The business is neither making a profit or a loss at the break-even point.
 The break-even point is the point of intersection of the cost and income graphs

Break-even GRAPHICAL REPRESENTATION OF THE BREAK-EVEN ANALYSIS:

analysis
Income
In these
consolidation
lessons, the
graphs are used
to do the break-
even analysis.

The digital
source explains
how the break-
Cost
even point can be Area of Profit
calculated using a
formula. Break-even Point

Fixed Cost of R50

Area of Loss
 ACTIVITY 2
Fred is making wooden toys. The graph below shows his income and expenses. Use the graph to answer the
questions that follow.
NB: Normally in the
Grade 12 National
Examination Papers
grids will be provided.
You should be able to
interpret the
following:

1. What is display on
the horizontal axis?
2. What is display on
the vertical axis?
3. What is the intervals
on the different axis?
Use the following
procedure:
Count the intervals
/lines, excluding 0’s
line, to the first value
displayed in this case
500. So the number
of lines up to 500 is
5. Divide 500 by 5
(500 ÷ 5 = 100) So
each interval or line
represents 100. So
from the bottom to
500 is: 0, 100, 200,
Setting up a500.
300, 400,
formula:
4. The same procedure
can be followed
Consider the to
following: the
determine
intervals/line’s value
 on Fixed cost
the horizontal
 Cost per
axis.
2.1 How much is Fred’s fixed expenses?
5. Use a RULER to
jersey 2.2 How many toys should Fred sell to earn R800?
determine or read of 2.3 How much does Fred sell one toy for?
values.
Check how you 2.4 Will Fred make a profit or a loss if he sells 7 toys?
are calculating the 2.5 How much will it cost Fred to make 30 toys?
cost and set up 2.6 How much will Fred earn if he sells 40 toys?
your formula in a 2.7 How much profit will Fred make if he sells 50 toys?
Graph
similar way. 2.8 How many toys need Fred to sell to break-even?
 ACTIVITY 3
Description Mrs Jones bought a knitting machine for R5 600 to make jerseys. It will cost her R60 (including wool and
electricity) to make one long-sleeved jersey. The school buys a long-sleeved jersey for R95,00.

The TABLE below shows the relationship between the costs and income for making and selling long-sleeved
jerseys.

TABLE: Costs and income for making and selling long-sleeved jerseys
Table
NUMBER OF JERSEYS
0 60 A 120 160 180 200
Costs in rand 5 600 9 200 11 600 12 800 15 200 16 400 C
Income in rand 0 5700 9 500 11 400 15 200 B 19 200

3.1 Determine the missing values A, B and C.

3.2 The formula to determine the income is: Income (in rand) = 95 × number of jerseys sold

Write down a formula to determine the costs in the form, Costs in rand = …

3.3 On the graph below, the line graph shows Mrs Jones income from selling 200 long-sleeved jerseys.
Draw another line graph on the same grid representing the costs of making 200 long-sleeved jerseys.

3.4 Determine the minimum number of jerseys Mrs Jones should sell to cover her costs.

3.5 Mrs Jones wants to sell fewer jerseys to break-even. What action should she take? Should she increase or
decrease the selling price of the jerseys?
 Question 3.3

NB: Normally in the Gr

12 National
Examination Papers
grids will be provided. Income and Costs of 200 long-sleeved jerseys
You should be able to
interpret the following: 20000
1. What is display on
the horizontal axis?
18000
2. What is display on
the vertical axis?
16000
3. What is the intervals
on the different axis?
Use the following 14000
procedure:
Count the intervals
/lines, excluding 0’s 12000
line, to the first value
Amount in Rand

displayed in this case

2000. So the number
10000
of lines up to 2000 is
…. Divide 2000 by
… (2000 ÷ … = …)
So each interval or 8000
line represents...

4. The same procedure 6000

can be followed to
determine the
intervals/line’s value 4000
on the horizontal
axis.
2000
5. Use a RULER to
determine or read of
values.
0
0 50 100 150 200

Number of long-sleeved jerseys

ACTIVITY 4
Carmen sells fruit. Use the following information of her fruit stall to answer the questions that follow:
 She spends on average R100 buying her fresh fruit every day and R20 for other costs.
 She repacks it into 60 packets and she sells it at R15 per packet.
 She pays R25 in transport fees every day.
 A permit to sell her fruit costs her R120 per month – She sells 6 days per week (on average 4 weeks
per month)
4.1 Calculate Carmen’s daily costs of only the permit.
4.2 Calculate Carmen’s total daily expenses.
4.3 Calculate how many packets should Carmen sell daily to break-even.
4.4 If Carmen sells on average 25 packets per day, calculate her total income per week.
4.5 Evaluate if Carmen’s selling price is appropriate by calculating her profit margin per week using her
average weekly income as calculated in question 4.4
Total Profit
Use the following formula: Profit Margin = × 100%
Total Income
 ACTIVITY 5 5.3 The following formulas represent the actual
Mr B’s Kitchen, offered the following meals at costs for Mr B’s Kitchens’ meals:
the local rugby’s club matches: Cost of Option A = R700 + R9,00 × number of meals
Cost of Option B = R500 + R7,00 × number of meals
Option Item Price
Burger and Chips 5.3.1 Write down the two formulas that represent the
Option A R40
Matrics are Fanta/Coke/Water income received from the sales of Mr B’s
expected to be Sausage Roll Kitchen.
Option B R30
able to easily Fanta/Coke/Water Income Option A = …
apply basic Income Option B = …
concepts such as 5.1 Mr B’s Kitchen sold a total of 205 Option A
percentages in meals and 295 Option B meals at a match. 5.3.2 The table represents the Cost and Income of the
different contexts Calculate the total income in rand. options
and topics. 5.2 There was a total of 1 225 meals sold by all Number
the food stalls at the rugby match. Calculate 0 50 100 150 200
of Meals
what percentage of meals that was bought 205
Option Cost 700 1150 A 2500
from Mr B’s Kitchen. 0
A
Income 0 2000 4000 B 8000
155
Cost 500 850 1200 1900
Option 0
B 450
Income 0 1500 3000 C
0
Calculate the missing values A, B and C.

5.4 The graphs below represent the cost of one of the options and the income received from the sale of each
of the meals. Use the graphs to answer the questions that follow.
5.4.1 Label each graph using the headings below:
Option A: Cost
Option A: Income
Option B: Income

5.4.2 Draw on the same grid the graph of the cost of Option B.
5.4.3 Each meal option has its own break-even point. Label Option A’s break-even point with a letter A
and Options B’s with a letter B on the graph.
 5.4.4 Estimate, from the graph the number of meals that need to be sold in order for Mr B’s Kitchen to
break even for each meal option.

ANSWERS
ACTIVITY 1 3.2.2 Key rings total profit = 990 × 4 = R3 960
Cost price = Selling Price – Profit Coffee mugs total profit = 1 260 × 5 = R6 300
= 2 999 – 1 200 Key Rings total income = 990 × 9 = R8 910
= R1 799 Coffee mugs total income = 1 260 × 15 = R18 900
Profit Selling Price−Cost Pice Total Profit
1.2 % Profit = × 100% OR Profit Margin of key rings = × 100%
Cost Price Cost Price Total Income
× 100% 3960
1200 2999−1799 = × 100%
= × 100% OR × 100% 8910
1799 1799 ≈ 44,4%
≈ 66,7% 6300
2. Selling price = Cost Price + Profit / Mark Up Profit Margin of coffee mugs = × 100%
18 900
= 100% + 30% ≈ 33,3%
Thus R250 = 130% Key ring has the biggest profit margin.
130
Cost Price = 250 ÷
100 150
≈ R192,31 4. Selling price = 0,80 + 0,80 × or 0,8 × (100% + 150%)
100
Profit = 0,80 + 1,20 or 0,8 × 250% or 0,8 × 2,5
3.1 % Profit of key ring = × 100%
Cost Price = R2,00
4
= × 100% ACTIVITY 2
5
= 80% 2.1 R250
Profit 2.2 20
% Profit of coffee mug = × 100% 2.3 Price of one = 800 ÷ 20
Cost Price
= R40
5
= × 100% 2.4 Loss
10 2.5 R700
= 50% 2.6 R1 600
The key ring has the highest percentage profit. 2.7 Profit = Income – Expenses
= 2 000 – 1 000
3.2.1 Key rings sold = 150 + 200 + 180 + 240 + 220 = 990 = R1 000
Coffee mugs sold = 300 + 270 + 180 + 225 + 285 = 1 260 2.8 10
Jenny is wrong/Her statement is invalid / not valid
ACTIVITY 3 ACTIVITY 4
3.1 A = 9 500 ÷ 95 or 11 600 – 5 600 = 6 000 4.1 Weekly permit costs = 120 ÷ 4 = 30
= 100 6 000 ÷ 60 = 100 Daily permit costs = 30 ÷ 6 = R5
B = 180 × 95 = R17 100 4.2 Total daily expenses = 100 + 20 + 25 + 5 = R150
C = 5 600 + 200 × 60 = R17 600 4.3 Break-even = 150 ÷ 15
= 10 packets
3.2 Cost in Rand = 5 600 + 60 × number of jerseys 4.4 Total income per week = 25 × 15 × 6 = R2 250
4.5 Total expenses per week = 150 × 6 = 900
3.3 Total Profit = 2 250 – 900 = 1 350
Total Profit
Profit margin = × 100%
Total Income
1350
= × 100%
2250
= 60%
Yes, it’s appropriate.

ACTIVITY 5
5.1 Income = 205 × 40 + 295 × 30
= 8 200 + 8 850
= R17 050
500
5.2 % Sales = × 100%
1225
≈ 40,8%

5.3.1 Income Option A = 40 × number of meals

Income Option B = 30 × number of meals

5.3.2 A = 700 + 9 × 100 = 1 600

B = 150 × 40 = 6 000
C = 200 × 30 = 6 000
3.4 160 jerseys
3.5 increase

5.4

OPTION A : Income

OPTION B : Income

OPTION A : Costs

OPTION B : Costs

5.4.4 Option A = 22/23 (or any value between 20 and 25)

Option B = 21/22 (or any value between 20 and 25)