Senior High School

Business Mathematics
Module 7:
Buying and Selling

AIRs - LM
LU_Business Mathematics_Module7
ABM - BUSINESS MATHEMATICS
Module 7: Buying and Selling
Second Edition, 2021

Copyright © 2021
La Union Schools Division
Region I

All rights reserved. No part of this module may be reproduced in any form without written
permission from the copyright owners.

Development Team of the Module

Author: Benidict D. Casuga

Editor: SDO La Union, Learning Resource Quality Assurance Team
Content Reviewer: Donna Casilla
Language Reviewer: Ronald June Balsomo
Illustrator: Ernesto F. Ramos Jr.
Design and Layout: Angela Pauline C. Ganuelas

Management Team:

Atty. Donato D. Balderas Jr.

Schools Division Superintendent
Vivian Luz S. Pagatpatan, Ph.D
Assistant Schools Division Superintendent
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Office Address: Flores St. Catbangen, San Fernando City, La Union
Telefax: 072 – 205 – 0046
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LU_Business Mathematics_Module7
 Senior High School

Business Mathematics
Module 7:
Buying and Selling

LU_Business Mathematics_Module7
Introductory Message
This Self-Learning Module (SLM) is prepared so that you, our dear
learners, can continue your studies and learn while at home. Activities,
questions, directions, exercises, and discussions are carefully stated for you
to understand each lesson.

Each SLM is composed of different parts. Each part shall guide you
step-by-step as you discover and understand the lesson prepared for you.

Pre-tests are provided to measure your prior knowledge on lessons in

each SLM. This will tell you if you need to proceed on completing this
module or if you need to ask your facilitator or your teacher’s assistance for
better understanding of the lesson. At the end of each module, you need to
answer the post-test to self-check your learning. Answer keys are provided
for each activity and test. We trust that you will be honest in using these.

In addition to the material in the main text, Notes to the Teacher are
also provided to our facilitators and parents for strategies and reminders on
how they can best help you on your home-based learning.

Please use this module with care. Do not put unnecessary marks on
any part of this SLM. Use a separate sheet of paper in answering the
exercises and tests. And read the instructions carefully before performing
each task.

If you have any questions in using this SLM or any difficulty in

answering the tasks in this module, do not hesitate to consult your teacher
or facilitator.

Thank you.

LU_Business Mathematics_Module7
 Target

Business problems are always on our way. It takes us time to strategize our
plans to deal with these problems. Planning requires an individual to have very
good skills and be equipped with enough knowledge on how to handle business
stuffs. With the advancement of technology, it is already a necessity for a seller to
be technologically oriented and business wise in buying and selling.

Online sellers are evident on Facebook, wherein they use the specifications
of this application to make it more appealing to the netizens or customers.
However, this is not the only thing that online sellers should bear in mind in selling
products. Online sellers also plan on how to make better profit out of the items
they are selling.

In your previous lessons of buying and selling, you have learned pricing,
profit and loss, trade discounts, and break-even point.

This learning material will immerse you with information and activities that
will help you understand strategies in buying and selling. After going through this
learning material, you are expected to solve problems involving buying and selling
(ABM_BM11BS-Ij-9).

Subtasks:
1. List strategies on how to solve problems involving buying and
selling.
2. Describe the strategies to be used in solving problems.
3. Identify the appropriate values and formula to be used in solving
problems.
4. Solve problems involving buying and selling.
5. Interpret answers or values that will complete the concept of the
problem being solved.

Before going on, check how much you know about this topic. Do the activity
on the next page.

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 Jumpstart

For you to know more about the lesson, do the following activity. Have
fun and good luck!

Activity 1: Buy and Sell!

Directions: Plan for a simple business on how you will make profit using ₱430.00
as your capital. Follow the steps.

Buy or order any fruits you want that will fit to your budget of ₱430.00. Put your
answers on the table that follows.

APPLE ORANGE BANANA

20 pieces available 30 pieces available 10 pieces available
₱10.00 each ₱12.00 each ₱5.00 each

QUANTITYPrice AMOUNT SPENT

(per piece) (multiply quantity by price per piece)
APPLE ₱10.00
ORANGE ₱12.00
BANANA ₱5.00
TOTAL AMOUNT SPENT _________________
(Note: Your answer here should be less
than or equal to your budget of ₱430.00)

After you buy or order fruits, you can sell them for

APPLE ORANGE BANANA

₱12.00 each ₱14.00 each ₱6.00 each

QUANTITY Price SALES

(copy your (per piece) (multiply quantity by price per piece)
answer in
table 1)
APPLE ₱12.00
ORANGE ₱14.00
BANANA ₱6.00
TOTAL SALES

Now, subtract your total amount spent from the total sales. If you make a
profit more than ₱78.00, CONGRATULATIONS! You are a very good buyer and
seller.

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 Discover

In the previous activity, you were challenged as to how you will budget
₱430.00 in buying the fruits and sell it to make a profit more than ₱78.00. It is not
bad if your profit was less than or equal to ₱78.00, for as long as, you have the
profit and it can exceed your expenses. However, business is always an activity of
people that finds ways to get the maximum profit possible. Here are some ways on
how you can maximize capital to get higher pay back.

1. Be aware of Mark-up (M.U.) and Mark-up based on cost (M.U.cost)

Recall that Mark-up is an additional amount to arrive at a new selling price.
Mark-up based on cost is the ratio of the Mark-up to the cost. This strategy could
help us identify the “better buy” among products.

Example. Assume that 4 vendors are selling ballpens with different brand but
same in quality. You are to choose where to purchase ballpens that you can sell
also to your classmates.
Vendor A Vendor B Vendor C Vendor D
₱5.00/ piece ₱9.00/ piece ₱4.00/ piece ₱8.00/ piece

The suggested Mark-up when you resell the pen is given below,
Vendor A Vendor B Vendor C Vendor D
M.U. = ₱2.00 M.U. = ₱3.00 M.U. = ₱1.00 M.U. = ₱2.00

So, you can sell the pen to your classmates at ₱7.00, ₱12.00, ₱5.00, and
₱10.00, respectively.

CASE 1. You have so much money or you are financially able.

Ideally, you have to choose the pen from Vendor B because it gives higher
mark-up (₱3.00/pc.) when you resell it. Resellers are always looking at the mark-
up and not on the price.

CASE 2. You have a limited capital

Say, you only have ₱200.00 budget for the simple business. Will you still buy
pens from Vendor B? M.U.cost will help you choose.
Vendor A: 2 ÷ 5 = 0.40 or 40% Vendor C: 1 ÷ 4 = 0.25 or 25%
̅̅̅̅ or 33.33%
Vendor B: 3 ÷ 9 = 0. 33 Vendor D: 2 ÷ 8 = 0.20 or 25%

What does this mean? Since Vendor A has higher M.U.cost, this will give you
higher profit. Let us prove this by computing your profit.

Using ₱200.00 budget, how many pens can you purchase from the vendors?
Vendor A = ₱200.00 ÷ ₱5.00 = 40 Vendor C = ₱200.00 ÷ ₱4.00 = 50
Vendor B = ₱200.00 ÷ ₱9.00 = 22.22 ≈ 22 Vendor D = ₱200.00 ÷ ₱8.00 = 25

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Now, compute the profit you can get from purchasing pens

Vendor A: profit = purchased pens x M.U. = 40 pcs. X ₱2.00 = ₱80.00

Vendor B: profit = purchased pens x M.U. = 22 pcs. X ₱3.00 = ₱66.00
Vendor C: profit = purchased pens x M.U. = 50 pcs. X ₱1.00 = ₱50.00
Vendor D: profit = purchased pens x M.U. = 25 pcs. X ₱2.00 = ₱50.00

This suggests you to buy pens to Vendor A.

2. Know your profit and loss

Profit is the remaining amount after deducting all expenses from sales. Loss
occurs when all expenses exceed the total sales. Ideally, sellers must think of their
expenses before pricing of purchased items. This strategy uses only fundamental
operations.

Example. You went to Naguilian market and you purchased 5- kg chicken meat
which you paid ₱160.00 per kilogram. Your total fare amounting to ₱40.00 is paid
to the tricycle driver. You will resell the chicken meat to your neighbors. How much
will you sell the meat?

First, you must know the total expenses.

Chicken meat ( ₱160.00 x 5 )…………………………… ₱800.00

Fare ………………………………………………………….. ₱40.00
Total …………………………………………………………. ₱840.00

Next, divide total amount spent in the purchase of meat.

Cost of chicken meat per kilogram = ₱840.00 ÷ 5 = ₱168.00

To make a profit, the selling price per kilogram must be greater than
₱168.00. Mark-up will be applied in this case. It depends on you how much will be
the mark- up. Just make sure that the mark- up is reasonable. You can resell the
meat by ₱180.00 to earn a profit of ₱12.00/kg. Note that if you resell the meat less
than ₱168.00 per kilogram, you lose.

3. Don’t be tempted too much with discounts.

Discount is the reduction from the selling price granted to buyers. It could
be discounted intentionally or negotiable. Examples of intentional discount can be
seen in malls and even online, like ‘50% Sale’ tagged in your dream shirt.
Businessmen want to purchase items especially when it has discount, and they
resell it in its original price or more of it. Negotiable discount, on the other hand, is
done when a businessman purchases items (without a tagged discount) in a
wholesale and they wanted to reduce the total price based on the negotiation
between two parties. Just like when you buy vegetables in the market and you are
asking for a discount from the vendor because it is too expensive.

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Example. Analyn is interested in buying items in an online shop because of so
many discounts. She is interested in purchasing inflatable beds. There are so many
inflatable beds being offered in this online shop with different brands but same in
quality. Prices and discounts of these items are listed below.

Brand A: ₱1,400.00 with 50% discount

Brand B: ₱1,000.00 with 60% discount
Brand C: ₱1,100.00 with 40% discount

Although, all brands offered discounts, it doesn’t mean that they are all
worthy to be purchased. You must compute also how much will be its net invoice
price after the discount. Now, what brand should Analyn purchase for her to spend
the least?

Brand A: 50% of ₱1,400.00 is ₱700.00 ; NIP = ₱1,400.00 - ₱700.00 = ₱700.00

Brand B: 60% of ₱1,000.00 is ₱600.00 ; NIP = ₱1,000.00 - ₱600.00 = ₱400.00
Brand C: 40% of ₱1,100.00 is ₱440.00 ; NIP = ₱1,100.00 - ₱440.00 = ₱660.00

This means that Analyn should purchase Brand B because it has the least
Net Invoice Price.

4. Plan wisely using break-even point.

Break-even point is the meeting point of total revenue and total cost. This
means that the business neither makes a profit nor loss. Moreover, break-even
point means the operating profit is zero. This strategy in buying and selling is also
important in the production or purchase of items. Through this, we can be guided
to determine the number of items to be produced or purchased to meet the target
sales.

Example. You are planning to buy 10 cellphones and resell it to your friends. The
variable cost per cellphone is ₱8,250.00 and the fixed cost is ₱2,250.00. Each
cellphone will be sold for ₱9,000.00. If you purchase the 10 cellphones and resell
them to your friends, how much is your operating profit? What must be the
minimum number of cellphones to purchase in order to cover the expenses and
make a minimum profit?

It could be better if you will create a simple income statement to arrive at the
operating profit.

Sales (₱9,000.00 x 10) ……………………………………… ₱90,000.00

Less
Variable cost (₱8,250.00 x 10) ………………………. ₱82,500.00
Contribution Margin ………………………………………… ₱7,500.00
Less
Fixed Cost ………………………………………………… ₱2,250.00
Operating Profit ………………………………………………. ₱5,250.00

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 To get the minimum number of cellphones to purchase, use the Break-even
point formula which is obtained by dividing the fixed cost by the contribution
margin.

BEP in units = fixed cost ÷ unit contribution margin

= ₱2,250.00 ÷ ₱750.00
= 3 units or 3 cellphones

This means that if you only purchase 3 cellphones, you will not get profit
and you will not incur loss. Operating profit in this case will be zero. This is not
what you want, because you have to earn also in selling. In order to at least earn a
profit, then you must order at least 1 unit more than the BEP in units (more than
4 cellphones) and get a minimum profit of ₱750.00.

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 Explore

Here are some enrichment activities for you to work on to master and
strengthen the basic concepts you have learned from this lesson.

Enrichment Activity

Directions: Read carefully the business problem below and show your solutions in
the space provided.

BUSINESS PROBLEM:
Sweet company has the following expenses:
Monthly labor = ₱500.00
Materials = ₱6.00 per unit
Rent = ₱900.00

1. If its product sells ₱20.00 per unit, how many units must it sell to break-even?

Given: Price per unit =

Variable cost per unit =
Fixed cost =
FORMULA:

SOLUTION:

2. If the company produces 150 units and sells them for ₱30.00 per unit, how
much is the company’s operating profit? Complete the income statement below.

Sweet Company
Income Statement
Sales …………………….………………………………………. ₱
Less
Variable cost …………………….……………………….. ₱
Contribution Margin …………………………………………. ₱
Less
Fixed Cost ………………………………………………… ₱
Operating Profit ………………………………………………. ₱

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3. If the company sells their product at ₱35.00 with 20% discount, how much is the
Net Invoice Price?

Given: Price per unit =

Discount (in pesos) =
FORMULA:

SOLUTION:

4. If you will buy the product of Sweet company at ₱35.00 per unit and resell it at
20% M.U.cost, how much will be the new selling price?

Given: original selling price per unit =

M.U.cost =
SOLUTION:

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 Deepen

Now that you have learned the strategies and ways to solve problems
involving buying and selling, it is time for you to evaluate your peers’ business
management skills. This activity will also widen your knowledge about the actual
strategies of buying and selling. Your answers will be checked and scored using the
rubrics on page 12.

Directions: Read carefully the procedures and write your answers in the space
provided for.

Ask any of your family members, relatives or friends who are currently
selling. List only 2 items he or she is selling. Better if the seller may give the two
most profitable items.

Note: During the interview, you may change the terms used in the following
questions in your own language such that the seller will understand your question.
Some of the questions below MAY OR MAY NOT be answered by the interviewee. If
the question is not applicable to him/her, write N/A.

Product # 01: Product # 02:

Questions Name: __________________
Name: _________________
1. How much is the
selling price per unit?
2. Are there raw
materials you used in
making this product?
What are they?
(e.g. food ingredients,
papers, tapes, woods,
glass)

3. How much is the total

cost of these materials?
4. Are there other fees
you charged to customers
in selling the product?
What are they?
(e.g. packaging, delivery
fee)

5. How much is the total

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cost of these charges?
6. Do you have other
expenses in operating
your business? What are
they?
(e.g. employees’
salary/wage, rent, tax,
transportation)

7. How much is the total

amount of these
expenses?
8. How much is your
profit when you sold out
all these items?
9. Do you have pricing
strategies? what are
these strategies that
would give you higher
profit?
(e.g. strategies in mark-
up, planning in the
quantity of items to be
purchased, decreasing
the expenses)
10. Do you have
difficulties in managing
your business especially
in terms of pricing? What
are these difficulties?

Product #01: Create an income statement of this seller based from his/her
answers.

Sales …………………….………………………………………. ₱
Less
Variable cost …………………….……………………….. ₱
Contribution Margin …………………………………………. ₱
Less
Fixed Cost ………………………………………………… ₱
Operating Profit ………………………………………………. ₱

Product #02: Create an income statement of this seller based from his/her
answers.

Sales …………………….………………………………………. ₱
Less
Variable cost …………………….……………………….. ₱
Contribution Margin …………………………………………. ₱
Less
Fixed Cost ………………………………………………… ₱

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 Operating Profit ………………………………………………. ₱
Questions:

1. How do you compare the two products in terms of pricing strategies and
production of items?
PRODUCT # 01 PRODUCT # 02

Pricing Pricing

Production of items Production of items

2. If you are the seller, what are the things that must be changed to improve the
profit in product 1 and product 2?

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 RUBRICS FOR SCORING THE OUTPUT

Poor Fair Good

Criteria
(1) (3) (5)
Neatness The output is The output is The output is
unorganized, with organized. Slightly clean and
scratches and neat, with a few organized.
unnecessary scratches and Incredibly neat,
marks. unnecessary with no obvious
marks. scratches and
unnecessary
marks.
Completion Only one question Some questions All questions were
was answered. were left answered, and
unanswered. other works were
fully
accomplished.
Accuracy Little to none of Some of the All of the answers
(computations and the answers are answers are are correct.
answers to correct. correct.
questions)
Legibility The output is not Words and Words and
readable. numbers can be numbers were
seen and are written legibly.
somewhat
readable.

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 Gauge

Directions: Read carefully the questions. Write the letter of the BEST answer from
the given choices. Write your answers in a separate sheet of paper.

Refer to the problem below to answer questions 1 to 5.

May Roces’ sari-sari store shows monthly fixed cost of ₱4,800.00 and a
variable cost per unit of ₱10.00. It produces 305 units in a month and sells it at
₱35.00 per unit.

1. What is the contribution margin?

A. ₱10.00 B. ₱25.00 C. ₱35.00 D. ₱350.00
2. How many units will be produced in 2 months?
A. 10 B. 35 C. 305 D. 610
3. How much is the total sales of the store in 2 months?
A. ₱10,675.00 B. ₱11,895.00 C. ₱21,350.00 D. ₱23,790.00
4. How much is the operating profit of the store in a month?
A. ₱1,278.00 B. ₱2,825.00 C. ₱7,625.00 D. ₱13,892.00
5. How many units of output to be produced in a month to break-even?
A. 192 B. 210 C. 398 D. 480

Refer to the problem below to answer questions 6 to 10.

Company A sells its product at ₱40.00 per unit. The variable cost per unit
is ₱4.00 and the fixed cost is ₱3,900.00. The company produces 500 units per
week. Company B produces 600 units per week and sells its product at ₱37.00 per
unit. The variable cost per unit and fixed cost are ₱3.75 and ₱4,789.00 respectively.

6. How much is the total revenue of company A?

A. ₱20,000.00 B. ₱22,200.00 C. ₱24,000 D. ₱24,800.00
7. How much is the total revenue of company B?
A. ₱20,000.00 B. ₱22,200.00 C. ₱24,000 D. ₱24,800.00
8. How much is the contribution margin per unit of company A?
A. ₱20.00 B. ₱33.25 C. ₱36.00 D. ₱24,800.00
9. How much is the contribution margin per unit of company B?
A. ₱20.00 B. ₱33.25 C. ₱36.00 D. ₱24,800.00
10. Which of the following has the total expenses of more than ₱5,950.00?
A. Company A B. Company B
C. Both A and B D. Neither A nor B

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Refer to the problem below to answer questions 11 to 15.

Maine sells cupcakes at ₱20.00 each. Variable cost per cupcake is ₱5.00
and her total fixed cost is ₱300.00. Maine sold 20 cupcakes to her friends.

11. How much is the total profit of Maine?

A. ₱0 B. ₱50.00 C. ₱100.00 D. ₱150.00
12. If the variable cost per cupcake is decreased to ₱4.00, how much is the new
total profit of Maine?
A. ₱5.00 B. ₱10.00 C. ₱15.00 D. ₱20.00
13. What must be the Mark up of the cupcake to get ₱40.00 total profit?
A. ₱2.00 B. ₱4.00 C. ₱5.00 D. ₱6.00
14. What is the contribution margin per unit in selling cupcakes?
A. ₱5.00 B. ₱10.00 C. ₱15.00 D. ₱20.00
15. If the fixed cost is decreased by 50.00, how much is the total profit of
Maine?
A. ₱50.00 B. ₱100.00 C. ₱150.00 D. ₱200.00

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LU_Business Mathematics_Module7
15
EXPLORE
1. If its product sells ₱20.00 per unit, how many units must it sell to break-
even?
Given: Price per unit = ₱20.00
Variable cost per unit = ₱6.00
Fixed cost = ₱500.00 + ₱900.00 = ₱1,400.00
FORMULA:
B.E.P. in units = F.C. ÷ (P – V)
SOLUTION:
B.E.P. in units = ₱1,400.00 ÷ (₱20.00 – ₱6.00)
= ₱1,400.00 ÷ ₱14.00
= 100
2. If the company produces 150 units and sells them for ₱30.00 per unit, how
much is the company’s operating profit? Complete the income statement below.
Sweet Company
Income Statement
Sales …………………….………………………………………. ₱4,500.00
Less
Variable cost …………………….……………………….. ₱900.00
Contribution Margin …………………………………………. ₱3,600.00
Less
Fixed Cost ………………………………………………… ₱1,400.00
Operating Profit ………………………………………………. ₱2,200.00
3. If the company sells their product at ₱35.00 with 20% discount, how much is
the Net Invoice Price?
Given: Price per unit = ₱35.00
Discount (in pesos) = 20% of ₱35.00 = ₱7.00
FORMULA:
N.I.P. = Price per unit – Discount in pesos
SOLUTION:
N.I.P. = ₱35.00 – ₱7.00
= ₱28.00
Answer Key
LU_Business Mathematics_Module7
16
4. If you will buy the product of Sweet company at ₱35.00 per unit and resell
it at 20% M.U.cost, how much will be the new selling price?
Given: original selling price per unit = ₱35.00
M.U.cost = 20% or 0.20
SOLUTION:
N.S.P. = ₱35.00 + (20% of ₱35.00)
= ₱35.00 + ₱7.00
= ₱42.00
GAUGE
Multiple Choice:
1. B – ₱25.00
2. D – 610
3. C – ₱21,350.00
4. B – ₱2,825.00
5. A – 192
6. A – ₱20,000.00
7. B – ₱22,200.00
8. C – ₱36.00
9. B – ₱33.25
10. B – Company B
11. A - ₱0
12. D – ₱20.00
13. A – ₱2.00
14. C – ₱15.00
15. A – ₱50.00
References
Printed Materials:

Commission on Higher Education. (2016). Business Mathematics, Teaching Guide

for Senior High School. Quezon City, Philippines

Mariano, Norma D. (2016). Business Mathematics. Manila, Philippines: Rex

Bookstore, Inc.

Website:

Gatchalian, John Michael. (2014, March 9). Mathematics on Sellin and Buying.
Retrieved July 24, 2020 from https://prezi.com/stpktylza43p/mathematics-
of-sellin-and-buying/?fallback=1

Nadzdri, Nazrin. (2014, February 19). Business Math Chapter 6. Retrieved July 24,
2020 from https://www.slideshare.net/nazrin91/chapter-6-31397772

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 For inquiries or feedback, please write or call:

Department of Education – SDO La Union

Curriculum Implementation Division
Learning Resource Management Section
Flores St. Catbangen, San Fernando City La Union 2500
Telephone: (072) 607 - 8127
Telefax: (072) 205 - 0046
Email Address:
launion@deped.gov.ph
lrm.launion@deped.gov.ph

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