NAGA CITY SCIENCE HIGH SCHOOL

SENIOR HIGH SCHOOL DEPARTMENT

2ND SEMESTER S/Y 2020 – 2021
QUARTER 3, WEEK 5 AND 6: APRIL 28 to MAY 11

PERFORMANCE TASK: SIMPLE PRICING STRATEGY

Learners pretend that they are planning for a simple food sale in their school to raise
funds for their organization plans to pursue. Learners may choose to sell ice cream,
fishballs, sago’t gulaman, etc.

After identifying what they are going to sell, learners accomplish the following:
STEP 1: Choose a name for their product. Example: Meryl’s Ice Cream
STEP 2: Prepare the list of estimated prices for all the materials needed. Present their
materials, cost, and other expenses using tables.
STEP 3: Determine the cost price of each item. Explain how they arrived with the
amount.
STEP 4: Determine the selling price of each item using 30% profit based on cost. Show
complete solution.
Answer the following questions:
• How much is the mark-on per unit/item?
• Is there a possibility for you to mark-up your product? Explain your
answer.
• Is there a possibility for you to mark-down your product? Explain your
answer.

The solution consists the following to be considered complete:

1. Identify the question (State what is asked or what should be solved)
2. Identify the needed information (Enumerate the given)
3. Write an expression (Utilize the equations presented in this lesson)
4. Solve the expression to find the value of the unknown.
5. State the conclusion for your solution

Learners may watch a supplementary video: “Solving Mark-on, Mark-up, and Mark-down
Given Price of a Product”, to be uploaded in the Google Classroom, to help them with the
computation involved in this performance task.
In case of queries or need for consultation, learners may reach out to their subject
teacher for help through FB Messenger, SMS, Call, or Email.
This task must be written or encoded on a letter-size bond paper (8.5 x 11), font-size:
12, font-style: “Cambria”. This could be submitted in Google Classroom or personally
through their parents or authorized guardian in school.
DEADLINE: MAY 12, 2021
See rubric for this activity at the 8th page of LAS 6.

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 NAGA CITY SCIENCE HIGH SCHOOL
SENIOR HIGH SCHOOL DEPARTMENT
2ND SEMESTER S/Y 2020 – 2021
QUARTER 3, WEEK 5: APRIL 28 TO MAY 4

BUYING AND SELLING

MARK-ON, MARK-DOWN, AND MARK-UP GIVEN THE PRICE OF A PRODUCT

INTRODUCTION
Different types of business take part in buying and selling activities. As part of the process,
they need to decide on how to set up the prices for their products. Factors such as cost and even
the ability of the market to pay and willingness to pay. Through this topic, you will gain
understanding of the terms commonly used in buying and selling activities. Misuse of the terms
may lead to inappropriate pricing which could result to losses.

LEARNING COMPETENCIES
 differentiate the mark-on, mark-down, and mark-up given price of a product
 obtain the mark-on, mark-down, and mark-up given price of a product
 differentiate mark-up from margins
 describe how gross margins is used in sales

To understand the concept of mark-on, mark-up, and mark-down, let us first define these important
terms used in business.

PRICING
Setting prices is another application of our knowledge on PERCENTAGE. Trading or
merchandising firms and manufacturing firms make use of pricing decisions. Trading or
merchandising firms are those who do “buy and sell”. It means they sell what they buy.
Manufacturing firms are those who buy raw materials, process them and sell finished products.
Setting the right price is important for goods to sell. If the price is too high, the customers
may not be able to afford it; if it is too low, the company may not be able to make a profit. Aside from
the cost, of the product, you have to understand the following terms: cost price, operating cost,
selling price, profit, mark-up, mark-on, and markdown.

COST PRICE
This refers to the purchase price of a product that a company or store is going to sell. For
example, if a store owner bought a T-shirt for Php 150, this is the cost price of the product as far as
the store owner is concerned.
It is also the price that has to be spent to produce goods or service before any profit is added.
This is usually computed on per unit basis.
For instance on producing Camote cue, if the total cost of raw materials is Php 400 which will
produce 50 sticks of Camote cue, divide the total cost with the number of sticks to be sold. Then, the
cost price of each stick is Php 8.00.

OPERATING COST
This refers to the price (per unit) incurred relative to the production and sale of commodity.
This includes other expenses like rent, staff salaries, travel expenses and other incidental expenses.

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 Operating cost can also be set as a percentage of the cost price. For
example, the operating cost for a T-shirt purchased from Divisoria at Php 200
incurred: can be set at 25% of the cost price. In this case, the operating cost is Php 50
to get or (multiply rate of operating cost 0.25 with cost price 200).
receive For instance on producing Camote cue, the operating cost refers to the
other expenses incurred to produce Camote cue. If the total operating expenses
in producing 50 sticks of Camote cue is Php 150, then the operating expense
per stick is Php 3.00 (divide total cost by number of sticks produced).

SELLING PRICE
This refers to the price at which the product or item is sold per unit.
The selling price is obtained using the given formula below.

SELLING PRICE = COST PRICE + OPERATING EXPENSES + PROFIT

S=C+E+P
where S = Selling Price
C = Cost Price
E = Operating Expenses
P = Profit
PROFIT
It is the money earned after the cost price and operating expenses are
accounted for after the sale of a commodity.
For instance on producing Camote cue, assuming that the estimated
cost of raw materials is Php 400.00 and the other expenses is estimated to be
Php 150.00. From the raw materials bought, we estimate that 50 Camote cue
sticks will be sold. With that, cost price is divided by 50 to obtain the cost per
stick of camote cue, which is Php 8.00 per stick. The operating cost per unit is
also obtained by dividing the estimated total expenses by 50. Then the
operating cost per stick of camote cue is Php 3.00. If we set out profit to be
25% of the cost price per stick, we obtain the amount of profit by
multiplying .25 with 8 that is Php 2.00 per stick. We can now obtain the selling
price of the camote cue using the given formula.
S=C+E+P
S=8+3+2
S = 13
selling price: Therefore, for us to achieve the desired profit of 25%, we have to sell a
market price stick of Camote cue at Php 13.00.
that a product
will be sold

cost:
actual price After learning how to set the selling price of a product, let us learn what mark up,
that the mark on, and mark down is all about.
product was
bought from a MARK-ON
manufacturer This is the difference between the selling price and the cost. For
or wholesaler example, if Mrs. Marquez decides to sell at Php 90.00, the T-shirts she bought
for Php 75.00, Php 75.00 is the COST, Php 90.00 is the SELLING PRICE; and
Php 15.00 is the MARK-ON (i.e. Php 90.00 — Php 75.00 = Php 15.00).

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Thus, we can say,
MARK-ON = SELLING PRICE — COST
Many entrepreneurs, accountants, and even ordinary people refer to mark-on as mark-up,
initial mark-up, or original mark-up. The term mark-on is seldomly used.

These are the formulas for computing the mark-on or initial mark-up, selling price and cost:
MARK-ON OR INITIAL MARK-UP = SELLING PRICE — COST
SELLING PRICE = COST + MARK-ON OR SELLING PRICE = COST + INITIAL MARK-UP
COST = SELLING PRICE — MARK-ON OR COST = SELLING PRICE — INITIAL MARK-UP

Example 1: If a 50 g coffee refill pack costs Php 33.50 and a convenience store adds an initial mark-up
(or mark-on) of Php 7.50 for all items it sells, what is the selling price for the coffee refill pack?
SOLUTION:
SELLING PRICE = COST + INITIAL MARK-UP
= Php 33.50 + Php 7.50 = Php 41.00

Example 2: If a convenience store sells bath soap for Php 48.00 and has a mark-on of Php 10.00, what
is the cost of the bath soap?
SOLUTION:
COST = SELLING PRICE — MARK-ON
= Php 48.00— Php 10.00 = Php 38.00

Example 3: If a 55 g pack of instant noodles costs Php 7.10 and is sold for Php 10.00, what is the initial
mark-up of the instant noodles?
SOLUTION:
INITIAL MARK-UP = SELLING PRICE — COST
= Php 10.00—Php 7.10
= Php 2.90

Here is another set of formulas that is used to compute the rate of mark-on or initial mark-up based on
cost when the cost and selling price are known.
MARK-ON = COST x RATE OF MARK-ON
RATE OF MARK-ON = MARK-ON  COST
Example 4: If a furniture dealer pays Php 3 664.10 for a kitchen cabinet and sells it for a mark-on of
Php 1 355.90, what is the rate of mark-on based on cost?
SOLUTION:
RATE OF MARK-ON = MARK-ON  COST
= Php 1 355.90  Php 3 664.10
= 0.3721 or 37.21 %

Example 5: If a marketing student buys a loaf of a bread for Php 36.50 and sells it for Php 45.00 during
the marketing week, find the rate of mark-on based on cost that she used.
SOLUTION:
MARK-ON = SELLING PRICE — COST
= Php 45.00 — Php 36.50 = Php 8.50
RATE OF MARK-ON = MARK-ON ¸ COST
= Php 8.50 ¸ Php 36.50
= 0.2329 or 23.29%

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NOTE: We must realize, however, that the costs of transportation, such as freight and trucking charges,
and other operating expenses are part of the costs of the product because these are considered
essential parts of the cost of the goods.

Use these formulas to find the selling price when the cost and rate of mark-on based on cost are known.
SELLING PRICE = COST + MARK-ON (MARK-ON = COST x RATE OF MARK-ON)
SELLING PRICE = COST + COST x RATE OF MARK-ON
SELLING PRICE = COST (1 + RATE OF MARK-ON)
Example 6: What should be the selling price of a 300 mL can of condensed milk if it costs Php 53.00 and
the retailer desires to have a mark-on of 50% based on cost?
SOLUTION:
SELLING PRICE = COST (1 + RATE OF MARK-ON)
= Php 53.00 (1 + 0.50)
= Php 79.50
Example 7: If the desired rate of mark-on based on cost for a pair of jeans is 110%, what will be the
selling price of the pair of jeans which costs Php 490?
SOLUTION:
Selling Price = Cost (1 + Rate of Mark-on)
= Php 490 (1 + 1.10)
= Php 1 029
To solve for the cost when the mark-on/initial mark-up and the rate of mark-on based on cost are known,
use these formulas:
MARK-ON = COST x RATE OF MARK-ON
COST = MARK-ON  RATE OF MARK-ON
Example 8: The mark-on/initial mark-up for a 155 g can of sardines in tomato sauce is Php 2.75m
which represents a 20% mark-on/initial mark-up based on cost. What is the cost of the canned
sardines in tomato sauce?
SOLUTION:
COST = MARK-ON  RATE OF MARK-ON
= Php 2.75  0.20
= Php 13.75
Example 9: Find the cost of a box of bottled distilled water if the mark-on/initial mark-up was Php 300
and the rate of mark-on/initial mark-up was 40% of the cost?
SOLUTION:
COST = MARK-ON  RATE OF MARK-ON
= Php 300  0.40
= Php 750
This set of formulas is used to find the cost when the selling price and the rate of mark-on/initial mark-up
based on cost are known.
RATE OF SELLING PRICE = RATE OF COST + RATE OF MARK-ON
RATE OF SELLING PRICE = 100% + RATE OF MARK-ON
SELLING PRICE = COST x RATE OF SELLING PRICE
COST = SELLING PRICE  RATE OF SELLING PRICE
Example 10: A long-sleeved shirt is sold for Php 790. The rate of mark-on/initial mark-up is 30% of the
cost. Find the cost of the long-sleeved shirt and the mark-on/initial mark-up.
SOLUTION:
RATE OF SELLING PRICE = 100% + RATE OF MARK-ON
= 100% +30% = 130%
COST = SELLING PRICE  RATE OF SELLING PRICE
= Php 790  1.30
= Php 607.69

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MARK-ON/INITIAL MARK-UP = SELLING PRICE — COST
= Php 790 — Php 607.69
= Php 182.31
Example 11: Find the cost and the mark-on/initial mark-up for a printed long-sleeved blouse which is
sold for Php 1 290 and whose rate of mark-on is 63.29%
SOLUTION:
RATE OF SELLING PRICE = 100% + RATE OF MARK-ON
= 100% + 63.29% = 163.29%
COST = SELLING PRICE  RATE OF THE SELLING PRICE
= Php 1 290  1.6329
= Php 790.01
MARK-ON/INITIAL MARK-UP = SELLING PRICE—COST
= Php 1 290 — Php 790.01
= Php 499.99
MARK-UP
It is the amount by which the regular selling price is increased. Mark-up usually becomes an
option for businesses during the following instances:
• A calamity has hit the source of raw material or commodity affecting its supply
• Seasonal demands (Christmas, Valentine’s, etc.)
• Special occasion is being celebrated (commemoration, death anniversary, etc.)

Mark-up is obtained by getting the difference of the peak selling price and the regular selling
price. The following formulas may be used:
MARK-UP = PEAK SELLING PRICE — REGULAR SELLING PRICE
NEW SELLING PRICE = REGULAR SELLING PRICE + MARK-UP
REGULAR SELLING PRICE = PEAK SELLING PRICE — MARK-UP
MARK-UP RATE = MARK-UP  REGULAR SELLING PRICE
Example 12: What are the mark-up and the rate of mark-up if a retailer has increased the selling price
of a can of powdered milk from Php 44.15 to Php 57.10?
SOLUTION:
MARK-UP = PEAK SELLING PRICE — REGULAR SELLING PRICE
= Php 57.10 — Php 44.15 = Php 12.95
MARK-UP RATE = MARK-UP  REGULAR SELLING PRICE
= Php 12.95  Php 44.15 = 0.2933 or 29.33%
Example 13: In example 12, what are the mark-up and the peak selling price if the retailer has changed
his mind and decided to just apply 15% mark-up rate on the selling price of the powdered milk?
SOLUTION:
From the given formula for the mark-up rate, derive the formula for the mark-up.
MARK-UP = REGULAR SELLING PRICE x MARK-UP RATE
= Php 44.15 x 0.15
= Php 6.62
PEAK SELLING PRICE = REGULAR SELLING PRICE + MARK-UP
= Php 44.15 + Php 6.62 = Php 50.77
Example 14: What was the regular selling price of the furniture set you have purchased for Php 89 999
if there was a mark-up rate of 15%?
SOLUTION:
The formula for the regular selling price was derived as follows:
MARK-UP = REGULAR SELLING PRICE x MARK-UP RATE
PEAK SELLING PRICE = REGULAR SELLING PRICE + MARK-UP
PEAK SELLING PRICE = REGULAR SELLING PRICE + (REGULAR SELLING PRICE x MARK-UP RATE)
PEAK SELLING PRICE = REGULAR SELLING PRICE (1 + MARK-UP RATE)
REGULAR SELLING PRICE = PEAK SELLING PRICE  (1 + MARK-UP RATE)
= Php 89 999  (1 + 0.15)
= Php 78 260

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Example 15: What was the mark-up rate applied by a liquefied petroleum gas (LPG) dealer if she has
increased the price of an 11 kg cylinder of LPG from Php 832 to Php 896?
SOLUTION:
MARK-UP = PEAK SELLING PRICE — REGULAR SELLING PRICE
= Php 896 — Php 832 = Php 64
MARK-UP RATE = MARK-UP  ORIGINAL SELLING PRICE
= Php 64  Php 832
= 0.0769 or 7.69%
MARK-DOWN
It is the difference between the original selling price and new selling price, wherein the new
selling price (sale price) is lower than the original selling price (regular price). Mark-downs are created
to remove a slow-selling item from the inventory. Other reasons why mark-downs are considered as an
option for a business owner are the following:
• The item is a perishable item and it is best to dispose it sooner than simply throw it away (cooked
food, fruits, vegetables, etc.)
• The item has become dirty or worn out, or possibly out of style.
• Competition between businesses forces the marking down of an item.

Mark-down is obtained by getting the difference of the regular selling price and the sale price.
The following formulas may be used:
MARK-DOWN = REGULAR SELLING PRICE — SALE PRICE
MARK-DOWN RATE = MARK-DOWN  REGULAR SELLING PRICE
Example 16: Your apparel store usually offers items with markdowns at the end of season. If the price
of the slim fit jeans was reduced from Php 1 290 to Php 999, what is the markdown? What is the rate of
markdown introduced by your store?
SOLUTION:
MARK-DOWN = REGULAR SELLING PRICE — MARKDOWN PRICE
= Php 1 290 — Php 999 = Php 291
MARK-UP RATE = MARK-DOWN  REGULAR SELLING PRICE
= Php 291  Php 1 290 = 0.2256 or 22.56%
Example 17: If men’s accessories (cap/hat) are being sold for Php 990, what should be the new selling
price if you decided to give a mark-down rate of 20%?
SOLUTION:
MARK-DOWN = REGULAR SELLING PRICE x MARK-DOWN RATE
= Php 990 x 0.20 = Php 198
SALE PRICE = REGULAR SELLING PRICE — MARK-DOWN
= Php 990 — Php 198 = Php 792
Example 18: What was the regular selling price of a smart TV if it was purchased for only Php 43 199
at a marked down rate of 30%?
SOLUTION:
The formula for the regular selling price was derived as follows:
MARK-DOWN = REGULAR SELLING PRICE x MARK-DOWN RATE
SALE PRICE = REGULAR SELLING — MARK-DOWN
SALE PRICE = REGULAR SELLING PRICE — (REGULAR SELLING PRICE x MARK-DOWN RATE)
SALE PRICE = REGULAR SELLING PRICE (1 — MARK-DOWN RATE)
Thus, the formula for the regular selling price is given as:
REGULAR SELLING PRICE = SALE PRICE  (1 — MARK-DOWN RATE)
= Php 43 199  (1— 0.30)
= Php 61 712.86
MARK-UP VERSUS MARGIN
What is the difference between mark-up (initial mark-up or mark-on) and margin (gross
margin or gross profit)? Mark-up is the amount added to the cost of goods to obtain the selling price,
while margin (also known as gross margin or gross profit) is defined as selling price minus the cost of
the goods sold.
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Example 19: A mark-up of Php 100 when added to the cost of Php 490 would yield a selling price. The
mark-up rate is 20.41% which is computed by dividing the mark-up by the cost. Using the same
example, the margin would be equal to Php 100. The margin rate is 16.95%, which is computed by
dividing the margin by the selling price.
As you can see in the example, although the mark-up and margin have the same value of Php
100, the mark-up rate of 20.41% is greater than the margin rate of 16.95%. The reason behind is that
mark-up is a percentage of cost, while margin is a percentage of sales. So if you want to achieve
a certain margin, you have to initially mark-up a cost by a percentage greater than the
percentage of margin to ensure profit.

ACTIVITY 1:
Part A, Direction: Tell whether the situation is an example of Mark-up, Mark-on or Mark-down. Write
your answers on a separate sheet of paper.
1. A T-shirt bought at Php 150 was sold for Php 200.
2. A blouse originally priced at Php 500 is on sale for only Php 350.
3. A chocolate bar originally priced at Php80 is now being sold for Php100.
4. The cost of a dozen of apple is Php200. A store owner sell each apple for Php120.
5. Carl bought a pair of shoes regularly priced at Php 4,000 for only Php2,500.
6. A story book regularly priced at Php820 was sold at 30% discount.
7. Ben is waiting for a pair of sunglasses currently priced at Php1,200 to be sold at a sale price of
Php800.
8. A jacket which costs Php950 is being sold at Php 1,575.
9. During All Saint’s Day a bunch of flowers regularly priced at Php150 was being sold for Php200.
10. An online seller wants to realize a Php50 profit and set the operating expenses at 25% based on
cost.
Part B, Direction: Read the statements below. Decide whether you agree or not. Write YES if you
agree and NO if otherwise. Write your answers on a separate sheet of paper.
1. Mark-on is the sum of the operating expense and profit.
2. Mark-up becomes an option to store owners because of insufficient supply.
3. Mark-down helps to stimulate sales of slow selling products
4. Mark-up is also called Gross Margin.
5. Mark-on becomes an option to store owners to take advantage of the high demand.
6. Mark-down is an option for store owners to clear the inventory.
7. Mark-up, Mark-on and Mark-down can be expressed as a percentage.
8. Mark-down is getting advantage of high demand.
9. Mark-up can be computed when the selling price and cost price of the product are given.
10. Mark-down may lead to a zero or negative profit.

ACTIVITY 2:
Direction: Complete the table by computing the required value using appropriate formula. Write your
answer on a separate sheet of paper.
a. Mark-on
Cost (C) Selling Price (S) Mark-on (MO) Mark-on rate based on cost (MOc%)
1. ______________ Php 480 Php 120 __________________________
2. Php 300 Php 405 ________________ ___________________________
3. Php 400 __________________ _________________ 30%

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 b. Mark-Up
Regular Price (S) Peak Price (PS) Mark-up (MU) Mark-Up rate based on selling price (MUs%)

4. Php 280 Php 320 ________________ __________________________

5. __________________ Php 800 Php 120 ___________________________
6. Php 1,520 __________________ _________________ 15%
c. Mark-Down
Regular Price (S) Sale Price (PS) Mark-down (MD) Mark-Down rate based on selling price (MDs%)

7. Php415 Php 385 _________________ __________________________

8. _____________ Php 620 Php 74.40 ___________________________
9. Php 3,250 __________________ _________________ 20%
10. ______________ __________________ Php 150 25%

EXIT ACTIVITY:
Directions: Identify the given values for each situation below. Write your answers on a separate sheet
of paper.
1. I am waiting for a pair of sunglasses currently priced at Php 1,200 to be sold at a sale price of P850.
What rate of mark down will be necessary for this to happen?
Given: Regular Selling Price =_____(1)_______, Sale Price =__________(2)____________
2. A Cellphone Company buys Vivo phones at PhP8,500. Expenses are set at 18% of the selling Price and
the required profit is set at 20% of the selling price. During the weekend sale, the phone is sold at 10%
discount. What is the regular selling price of the phone?
Given: Cost = ___(3)___, Rate of Expenses = ___(4)___, Rate of Profit = ___(5)___, Rate of Discount = ___(6)___
3. Appliance store realizes a mark-up of P3,250 in selling washing machines. If the items are sold at a
mark-up of 40% of the selling price, what is the regular selling price of the washing machine?
Given: Amount of Mark-up = __(7)__, Rate of Mark-up based on Selling Price=___(8)____
D. An entrepreneur bought 225 blouses at PhP15,750. If the blouses were sold at a mark-up of 150%
based on cost, what was the amount of mark-up realized on the purchase?
Given: Cost = ______(9)______, Rate of Mark-up based on cost = _____(10)________

REFERENCES
Lopez-Mariano, N. (2016). Business Mathematics. Manila, Philippines: Rex Bookstore, Inc.
Pagoso, C.M. (1995). Business Mathematics. 84 P. Florentino St., Quezon City: Rex Bookstore, Inc.
Paredes. L., Walo, M. L., Ramos Jr., A., Asinas, M. A., Cando-Asuncion, J. (2016). Teaching Guide for
Senior High School — Business Mathematics. Commission on Higher Education.
Solano I. (2016). DIWA Senior High School Series: Business Math. Manila, Philippines: DIWA Learning
Systems Inc.
Yukee, Y.J.M. (2020). Business Mathematics — Module 4. La Union Schools Division Region I.
Yukee, Y.J.M. (2020). Business Mathematics — Module 5. La Union Schools Division Region I.

Prepared by:

CHELSIE D. BAJAMUNDE
Special Science Teacher I