Quarter 1 Week 6

Lesson :
Markup, Margins, Single
Trade Discounts and
Discount Series
Objectives

Differentiate Markup from margins.

Describe how gross margins used in sales.

Compute single trade discounts and

discount series.
 A. Markup
To cover the cost of doing business and to earn profit,
the retailers needs to sell their items at a higher price.
This is done by adding to the cost of their merchandise.
Thus, a markup is the difference between the selling
price and the cost of the merchandise. We can summarize
this relationship in the following equation:
Mark-up = Increased sales price – previous sales price
 B. Markup based on Cost
The markup is usually expressed as the percentage of the
cost of the product. This percentage is called the markup
rate based on the cost. In this case the selling price is
calculated by multiplying the markup rate to the cost,
and the adding the result to the cost of the merchandise.
That is:
Selling Price = Cost (1+ Markup rate)
 C. Margin
Markup based on the selling price is often called the
margin. The margin (or gross margin) is the selling price
minus the cost of goods sold. It is obtained by
multiplying the selling price by the percentage margin.
Margin = Percentage Margin X Selling Price
Cost
Selling Price =
1-Percentage Margin
D. Markup based on Selling Price

It is known as the percentage

margin.
Percentage Margin = Margin ÷ Selling Price
 E. Trade Discounts
It is a deduction from the list price granted to buyers. It is
also considered as a large deduction given to whole
sellers and manufacturers to enable them to make bigger
profit. This is usually expressed as a percentage of the list
price. This percentage is known as trade discount rate
or rate of discount. The resulting price after the discount
is applied is called the net price or the invoice price.
 Assuming that list price and the discount rate are
known. There are two methods in determining the net
price;
(a) Discount Method - The discount method is useful
if you want to find out both net price and the actual
amount of the discount.
(b) Complement Method – this involves computing
the complement rate, that is 100% minus the discount
rate. That is,
 ,
or

E. Trade Discounts
(a) Discount Method
Discount Price = Rate of discount X List Price
Net Price = List Price – Discount Price
List Price - Net Price
Rate of discount =
List Price
Discount Price
Rate of discount = 1
List Price
(b) Complement Method
Complement rate = 100% - Trade discount rate
Net Price = Complement Rate X List Price
 F. Discount Series
It is successive trade discount rates offer by the seller
to dispose the goods more quickly. Both discount and
complement method can be used in computing the net
price for a series of discounts.
In symbols the single trade discount rate is given by
r = 1 – (1-r1) (1-r2) (r3) …. (1-rk)
 G. Equivalent Single Trade
Discounts Rate
We have to remember that s discount series of 20% and
10% is not the same to a single discount of 30%. To
compute the single discount rate, we first deduct each
rate each rate in the discount series individually from
100%. Then multiply the differences to get the net price.
Finally, we deduct the net price from the list price to get
the single trade discount.
 G. Equivalent Single Trade
Discounts Rate

In symbols the single trade discount rate is given by

r = 1 – (1-r1) (1-r2) (r3) …. (1-rk)
 Sample Problems
1. If a business marks the price of a V cut T-shirt bought
for ₱100.00 to sell at ₱ 150.00. What is the mark up
price?
Solution:
𝑴𝒂𝒓𝒌𝒖𝒑 =𝑺𝒆𝒍𝒍𝒊𝒏𝒈 𝑷𝒓𝒊𝒄𝒆 − 𝑪𝒐𝒔𝒕
𝑴𝒂𝒓𝒌𝒖𝒑 =₱ 𝟏𝟓𝟎 .𝟎𝟎 − ₱ 𝟏𝟎𝟎 .𝟎𝟎
𝑴𝒂𝒓𝒌𝒖𝒑 =₱ 𝟓𝟎 .𝟎𝟎
 Sample Problems

Markup = Selling Price - Cost

A simple manipulation of the formula above will

give us the following formula:

Selling Price = Cost + Markup

Cost = Selling Price – Markup

 Sample Problems
2. A dealer bought 15 crates of bananas at ₱ 11, 250.00.
If the dealer imposed a 40% markup rate based on the
cost, Find the:
a. cost per crate of the bananas; and
b. amount of markup per crate of bananas
 Sample Problems
2. A dealer bought 15 crates of bananas at ₱ 11, 250.00.
If the dealer imposed a 40% markup rate based on the
cost, Find the:
a. cost per crate of the bananas; and
Solution:
𝐶𝑜𝑠𝑡 = ₱ 11,250.00 ÷ 15
𝐶𝑜𝑠𝑡 =₱ 750.00
.
 Sample Problems
2. A dealer bought 15 crates of bananas at ₱ 11, 250.00.
If the dealer imposed a 40% markup rate based on the
cost, Find the:
b. amount of markup per crate of bananas
Solution:
𝑀𝑎𝑟𝑘𝑢𝑝=𝑀𝑎𝑟𝑘𝑢𝑝 𝑟𝑎𝑡𝑒 𝑋 𝐶𝑜𝑠𝑡
¿ 0.40 𝑋 ₱ 750.00
𝑀𝑎𝑟𝑘𝑢𝑝=₱ 300.00
Markup = Markup rate X Cost and so;
Selling Price = Cost (1+ Markup rate)
Markup rate = Markup ÷ Cost
 Sample Problems
3. A shop sells a laptop computer at ₱ 20,000.00. If each
computer cost ₱ 16,500.00. What is the markup rate?
Solution:

𝑀𝑎𝑟𝑘𝑢𝑝=𝑆𝑒𝑙𝑙𝑖𝑛𝑔 𝑃𝑟𝑖𝑐𝑒 − 𝐶𝑜𝑠𝑡

¿ ₱ 20,000.00 − ₱ 16,500.00
𝑀𝑎𝑟𝑘𝑢𝑝 =₱ 3,500.00

Markup = Selling Price - Cost

Markup rate = Markup ÷ Cost
 Sample Problems
3. A shop sells a laptop computer at ₱ 20,000.00. If each
computer cost ₱ 16,500.00. What is the markup rate?
Solution:
𝑀𝑎𝑟𝑘𝑢𝑝 𝑟𝑎𝑡𝑒=𝑀𝑎𝑟𝑘𝑢𝑝 ÷ 𝐶𝑜𝑠𝑡
¿ ₱ 3 ,5 00.00 − ₱ 16,500.00
𝑀𝑎𝑟𝑘𝑢𝑝 𝑟𝑎𝑡𝑒=0.2121 𝑜𝑟 21.21 %

Markup = Selling Price - Cost

Markup rate = Markup ÷ Cost
 Sample Problems
4. A home appliance retailer bought 10 electric fans at
₱ 1,050.00 each. He sold each unit with 25% markup
based on the selling price. Find the
(a) selling price for each of electric fan; and
(b) margin per electric fan.

𝑆𝑒𝑙𝑙𝑖𝑛𝑔 𝑃𝑟𝑖𝑐𝑒 = 𝐶𝑜𝑠𝑡 ÷(1-𝑃𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒 𝑀𝑎𝑟𝑔𝑖𝑛)

Margin = Selling Price – Cost
 Sample Problems
4. A home appliance retailer bought 10 electric fans at
₱ 1,050.00 each. He sold each unit with 25% markup
based on the selling price. Find the
(a) selling price for each of electric fan; and
Solution:
𝑆𝑒𝑙𝑙𝑖𝑛𝑔 𝑃𝑟𝑖𝑐𝑒=𝐶𝑜𝑠𝑡 ÷ (1− 𝑃𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒 𝑀𝑎𝑟𝑔𝑖𝑛)
𝑆𝑒𝑙𝑙𝑖𝑛𝑔 𝑃𝑟𝑖𝑐𝑒= ₱ 1,050.00 ÷(1 −0.25)
𝑆𝑒𝑙𝑙𝑖𝑛𝑔 𝑃𝑟𝑖𝑐𝑒 = ₱ 1,050.00 ÷ (0 .75)
𝑆𝑒𝑙𝑙𝑖𝑛𝑔 𝑃𝑟𝑖𝑐𝑒 = ₱ 1, 4 00.00
 Sample Problems
4. A home appliance retailer bought 10 electric fans at
₱ 1,050.00 each. He sold each unit with 25% markup
based on the selling price. Find the
(b) margin per electric fan
Solution:
𝑀𝑎𝑟𝑔𝑖𝑛=𝑆𝑒𝑙𝑙𝑖𝑛𝑔 𝑃𝑟𝑖𝑐𝑒 – 𝐶𝑜𝑠𝑡
𝑀𝑎𝑟𝑔𝑖𝑛=₱ 1, 400.00 − ₱ 1,050.00
𝑀𝑎𝑟𝑔𝑖𝑛 =₱  3 50.00
 Sample Problems
5. An auto supply store sells auto spare parts for ₱
9,600.00, subject to a 12% trade discount. Calculate the
discount price and the net?
Solution: (a) Solve for Discount Price

𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑃𝑟𝑖𝑐𝑒=𝑅𝑎𝑡𝑒𝑜𝑓 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑋 𝐿𝑖𝑠𝑡 𝑃𝑟𝑖𝑐𝑒

¿ (0.12 )( ₱ 9,600.00 )
𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑃𝑟𝑖𝑐𝑒 = ₱ 1,152.00
 Sample Problems
5. An auto supply store sells auto spare parts for ₱
9,600.00, subject to a 12% trade discount. Calculate the
discount price and the net?
Solution: (b) Net Price (using discount method)

𝑁𝑒𝑡 𝑃𝑟𝑖𝑐𝑒=𝐿𝑖𝑠𝑡 𝑃𝑟𝑖𝑐𝑒 – 𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑃𝑟𝑖𝑐𝑒

¿ ₱ 9,600.00 − ₱ 1,152.00
𝑁𝑒𝑡 𝑃𝑟𝑖𝑐𝑒 = ₱ 8,448.00
 Sample Problems
6. Flor pays ₱ 390.00 for a dress listed at ₱ 650.00. What
is the rate of discount?
Solution:
List   Price  −  Net   Price
Rate   of   discount  = 
List   Price

650 − 390
¿
650

Rate   of   discount=0.40 𝑜𝑟 40 %
 Sample Problems
7. A list price of a large flat screen television set is
₱ 27,450.00, subject to 10%, 8%, and 5% trade discounts
(series). Compute the net price of the television set.
Solution: Using the discount method, we have the following discount
series net prices.
List Price Discount Discount Price Net Price
Rate
₱ 27,450.00 10%

8%

5%
 Sample Problems
7. A list price of a large flat screen television set is
₱ 27,450.00, subject to 10%, 8%, and 5% trade discounts
(series). Compute the net price of the television set.
Solution: Using the discount method, we have the following discount
series net prices.

Thus, the net price of the

television set is ₱21,592.17
 Sample Problems
8. A scientific calculator worth ₱ 1,495.00 is subject to
10% and 5% trade discounts. Find the following:
(a) single trade discount rate equivalent to the two trade
discounts.
(b) net price; and
(c) trade discount price.
 Sample Problems
8. A scientific calculator worth ₱ 1,495.00 is subject to
10% and 5% trade discounts. Find the following:
(a) single trade discount rate equivalent to the two trade
discounts.
Solution:
𝑟 =1 – (1 − 10 % )(1 − 5 %)
𝑟 =1 – (1 − 0.10 )(1 − .05 )
𝑟 =1 – ( 0.90 )( 0.95 )
𝑟 =0.145 𝑜𝑟 14.5 %
 Sample Problems
8. A scientific calculator worth ₱ 1,495.00 is subject to
10% and 5% trade discounts. Find the following:
(b) net price;
𝑁𝑒𝑡 𝑃𝑟𝑖𝑐𝑒=𝐶𝑜𝑚𝑝𝑙𝑒𝑚𝑒𝑛𝑡 𝑅𝑎𝑡𝑒 𝑋 𝐿𝑖𝑠𝑡 𝑃𝑟𝑖𝑐𝑒
Solution:

¿ (100 %  − 14.5 )(1,495.00 )

¿ (85.5 % )(1,495.00 )
¿ (0.855 )(1,495.00 )
𝑁𝑒𝑡 𝑃𝑟𝑖𝑐𝑒 = ₱ 1,278.23
 Sample Problems
8. A scientific calculator worth ₱ 1,495.00 is subject to
10% and 5% trade discounts. Find the following:
(c) trade discount price
Solution:

𝑇𝑟𝑎𝑑𝑒 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡= 𝐿𝑖𝑠𝑡 𝑃𝑟𝑖𝑐𝑒 – 𝑁𝑒𝑡 𝑃𝑟𝑖𝑐𝑒

¿ ₱ 1,495.00 − ₱ 1,278.23
𝑇𝑟𝑎𝑑𝑒 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 = ₱ 216.77
 Quarter 1 Week 7

Lesson:
Profit and Loss
Objectives

1. Differentiate profit from loss.

2. Illustrate how profit is obtain and how to

avoid loss in a given transaction.
 A. Determining Profit
Profit is the difference between gross revenue and the
total cost, provided that revenue is greater than the cost.
In other words, profit is the amount of money left after
all the costs and payables have been deducted from the
earnings generated from the business.
 B. Avoiding Losses
It is the difference between the total cost and the total
revenue, provided the cost is greater than the revenue
C. Profit
– a financial gain, especially the difference between the
amount earned and the amount spent in buying,
operating, or producing something.
• The profit is the difference between the gross revenue
and the total cost, provided that the revenue is greater
than the cost.
Profit = Revenue – Cost
D. Loss
a loss is an unanticipated decrease in a resource or
asset outside of normal business operations.
• The loss of a business is the difference between the
total cost and the generated revenue, provided that the
cost is greater than the revenue.
Loss = Cost – Revenue
E. Gross Sales

It refers to the total sales. Sales discounts and

sales returns and allowances are deducted from the
gross sales to arrive the net sales.
F. Cost of Sales
It is the purchased price and other expenses
incurred in buying the products that the business
has to sell including the freight- in or transportation
of the goods it buys or resale
G. Fixed Cost
are those that do not change no matter how many units
are sold such as; rent for store fronts, production
facilities, computers and software, advertising, and
public relations.
H. Total Revenue

It is the total receipts a seller can obtain from

selling goods or services to buyers.
I. Total Cost

It is an economic measure that sums all-expense

paid such as fixed cost, variable cost and overhead
expenses
Sample Problems
1. A carinderia owner earned a total of ₱ 5, 650.00 for the day.
Looking at her notebook, she noted that she has spent a total of
₱ 3, 125.00 on the same day to cover all the ingredients and
other things she used to her store. Determine her profit for the
day, if any?
Solution: Her gross revenue is ₱5,650.00, while her total cost is
₱3,125.00. Then, her profit is given by:
Profit = Revenue - Cost
= 5,650 – 3,125
Profit = ₱2, 525
 B. Avoiding Losses
It is the difference between the total cost and the total
revenue, provided the cost is greater than the revenue
 B. Avoiding Losses
It is the difference between the total cost and the total
revenue, provided the cost is greater than the revenue