DEE HWA LIONG ACADEMY

Sta. Maria Compound, Marcos Highway, Santolan, Pasig City

BUYING AND SELLING

Lesson 7:
Markup, Margins, and Markdown
Prepared by:
KELVIN ROY L. SAN MATEO
Mathematics Teacher
 What is the most
special thing you’ve
bought for yourself?
 If you’ve given a chance to sell that
thing, what price you will offer to the
buyer? Is it the same as the price
you’ve paid when you bought that
thing? Or you will add/ deduct certain
amount?
 Group Activity
List at least three (3) advantages of
doing online selling of your
products. The first group who will
finish the activity will have
additional points.
 “UNLOCKING OF TERMINOLOGIES AND
CONCEPTS”
a) Markup – (sometimes called as gross profit) is
an amount added to the cost of merchandise to
obtain a higher amount known as its selling
price.
b) Selling price – (sometimes called as retail price)
is what a product actually sells for in the store.
c) Cost – refers to the cost of the product sold or
service rendered.
 “UNLOCKING OF TERMINOLOGIES AND
CONCEPTS”
d) Net Profit – difference between the markup and the
overhead.
e) Overhead – (sometimes called as Operating
Expenses) these expenses include wages and
salaries of employees, rent, utility charges, and taxes.
f) Margin – (sometimes called as gross margins) the
difference from which expenses are usually met or
profit derived.
DETERMINING MARKUP AND MARKUP RATE
Formula for Markup:
Markup  Selling Price  Cost

ILLUSTRATION
A dealer bought 15 crates of
bananas at P11,250.00. If the dealer
imposed P1,050.00 as the selling
price per crate, find the amount of
markup per crate of bananas.
DETERMINING MARKUP AND MARKUP RATE
The markup is usually expressed as a percentage of the
cost of a product. This percentage is called the markup
rate or the markup rate based on the cost.
Markup
Markup Rate 
Cost
ILLUSTRATION
A shop sells a laptop computer at P20,000.00. If each
computer costs P16,500.00, what is the markup rate?
DETERMINING MARKUP AND MARKUP RATE
The formula for selling price when the given is markup rate
instead of markup
Selling Price  Cost 1  Markup Rate 
ILLUSTRATION
A home appliance retailer bought ten electric fans at
P1,050.00 each. He sold each unit with a 25% markup
based on the cost. Find the selling price for each electric
fan.
DETERMINING MARKUP AND MARKUP RATE
We can also compute markup based on the selling
price. The markup based on the selling price is often called
the margin, and the markup rate based on the selling price
is known as the percentage margin.
Margin
Percentage Margin 
Selling Price
ILLUSTRATION
A fruit vendor sells apple for P15.00 per piece. If the cost
per apple is P12.50, determine the Percentage margin.
DETERMINING MARKUP AND MARKUP RATE
The formula for selling price when the given is percentage
margin
Cost
Selling Price 
1  Percentage Margin
ILLUSTRATION
A retailer buys goods at P1,450.00 per item and
imposed a percentage margin of 21.62%. Determine the
selling price.
 ILLUSTRATION
a) A motorcycle salesman bought a scooter at
P47,500.00, Find the selling price if he wishes to
have a 25% markup based on the cost.
b) An electronics store sells headphones at P1,899.00.
If each headphone costs the store P1,200.00,
determine the markup and the rate of markup based
on the cost.
c) An appliance store purchases refrigerators at
P11,700.00 per unit. What is the selling price per
refrigerator if the store wishes to have a 30% margin?
 ILLUSTRATION
d) A purchasing manager of a business firm bought 10
dozen pairs of shoes for P101,040.00. If he sold each
pair for P1,180.00, find he markup and the rate of the
markup based on the cost.
e) A piece of furniture is to be sold at a profit margin of 20%
if it costs P4,450.00, find the selling price and the
margin.
f) A fruit dealer bought five crates of mangoes at
P3,150.00. If each crate contains 20 kilograms, and the
dealer imposed at 30% markup based on the cost, find
the selling price per kilogram of mangoes.
 SEAT WORK #1
Determine the missing amounts in the table below.
Markup/ Selling Markup Percentage
Item Cost
Margin Price Rate Margin
a P1,500.50 P1,200.00
b P3,200.00 40%
c P11,350.00 30%
d P350.00 50%
e P600.99 20%
f P200.00 P1,500.00
g P388.00 P950.50
h P150.00 10%
 INTRODUCTION TO MARKDOWN

In retailing, sellers usually buy large quantities of

merchandise hoping to realize large profits. There
are times, however, when not all of this
merchandise will be sold. To encourage the general
public to buy more and to reduce the amount of
unsold merchandise, retailers reduce their selling
prices during sales. Such reductions are called
markdowns.
 “UNLOCKING OF TERMINOLOGIES AND
CONCEPTS”
g) Markdown – is a reduction in the selling price of a
merchandise.
h) Original Selling Price – it is the original amount of the
merchandise to be sold.
i) Reduced Price – it is the new amount caused by the
reduction of markdown to the original selling price.
j) Perishables – are items that are likely to spoil easily;
for example, fruits, vegetables, bakery products etc.
 DETERMINING MARKDOWN AND
MARKDOWN RATE
Formula for Markdown:
Markdown  Original Selling Price  Reduced Price

ILLUSTRATION
A light-emitting diode (LED) lamp regularly priced at
P1,948.00 is on sale for P1,499.00. Determine the
amount of markdown
 DETERMINING MARKDOWN RATE
The markdown is usually given in terms of a percentage
of the original selling price. To compute the markdown rate,
we use the original selling price as the base.

Markdown
Markdown Rate 
Original Selling Price
ILLUSTRATION
A shop sells a laptop computer at P20,000.00. If the
shop imposed a P1,500.00 markdown, determine the
markdown rate.
 DETERMINING MARKDOWN RATE
Combining the two formulas for markdown given above,
we can obtain a formula for the reduced price in the
following manner:
Reduced Price  Original Selling Price 1  Markdown Rate 

ILLUSTRATION
During the clearance sale of a furniture shop, a dining
set originally priced at P42,000.00 was sold at 40%
markdown. What is the reduced price?
 ILLUSTRATION
a) An item sells for P480 and is reduced to sell for P300.
Find the markdown amount and the markdown rate
b) A book bag is priced to sell for P2,450 and was reduced
by 35%. Find the amount of markdown and the reduced
price.
c) An item costs P4,000 and is marked up 60% based on
the cost. The first markdown rate is 20% and the second
markdown is 30%. What is the final selling price?
d) An item is originally priced to sell for P750 and is marked
down 40%. A customer has a coupon for an additional
15%. What is the total percent reduction?
 ILLUSTRATION
e) A fish vendor bought 100 kilograms of bangus at P66.00 per
kilogram. He originally set the selling price to obtain a 40% gross
margin. However, to ensure that all will be sold, he gave a 15%
markdown. Determine the original selling price, reduced price,
and the amount of markdown per kilogram.
f) A certain interior design Shoppe paid P1,970 for a fern stand
and imposed a 60% markup based on the cost. The
management included it in a special promotional markdown of
30%. The stand was damaged during the sale and was marked
down for an additional 40%. What was the final selling price of
the stand?