BUYING AND

SELLING
 “I CAN” BANK
 I can differentiate markdown and
markup.
 I can illustrate how markdown and
markup are obtained.
 I can differentiate markup from
margins.
 I can describe how gross margins are
used in sales.
MARKUP AND
MARKDOWN
 MARKUP
 It refers to the amount added to the
cost of merchandise to obtain a
higher amount known as its selling
price.

𝐌𝐚𝐫𝐤𝐮𝐩 = 𝐒𝐞𝐥𝐥𝐢𝐧𝐠 𝐏𝐫𝐢𝐜𝐞 − 𝐂𝐨𝐬𝐭

𝐒𝐞𝐥𝐥𝐢𝐧𝐠 𝐏𝐫𝐢𝐜𝐞 = 𝐂𝐨𝐬𝐭 + 𝐌𝐚𝐫𝐤𝐮𝐩
𝐂𝐨𝐬𝐭 = 𝐒𝐞𝐥𝐥𝐢𝐧𝐠 𝐏𝐫𝐢𝐜𝐞 − 𝐌𝐚𝐫𝐤𝐮𝐩
 MARKUP
𝐌𝐚𝐫𝐤𝐮𝐩 = 𝐌𝐚𝐫𝐤𝐮𝐩 𝐑𝐚𝐭𝐞 × 𝐂𝐨𝐬𝐭

𝐒𝐞𝐥𝐥𝐢𝐧𝐠 𝐏𝐫𝐢𝐜𝐞 = 𝐂𝐨𝐬𝐭 + (𝐌𝐚𝐫𝐤𝐮𝐩 𝐑𝐚𝐭𝐞 × 𝐂𝐨𝐬𝐭)

= 𝐂𝐨𝐬𝐭 × (𝟏 + 𝐌𝐚𝐫𝐤𝐮𝐩 𝐑𝐚𝐭𝐞)
 Examples:
A dealer bought 15 crates of
bananas at ₱𝟏𝟏, 𝟐𝟓𝟎. 𝟎𝟎 . If the
dealer imposed a 40% markup
based on the cost, find the:
1. selling price per crate of the
bananas; and
2. amount of markup per crate of
bananas.
 Examples:
A shop sells a laptop
computer at ₱𝟐𝟎, 𝟎𝟎𝟎. 𝟎𝟎 . If
each computer costs
₱𝟏𝟔, 𝟓𝟎𝟎. 𝟎𝟎 , what is the
markup rate?
 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 × 𝐒𝐞𝐥𝐥𝐢𝐧𝐠 𝐏𝐫𝐢𝐜𝐞

 MARGIN
𝐒𝐞𝐥𝐥𝐢𝐧𝐠 𝐏𝐫𝐢𝐜𝐞
= 𝐂𝐨𝐬𝐭 + (𝐏𝐞𝐫𝐜𝐞𝐧𝐭𝐚𝐠𝐞 𝐌𝐚𝐫𝐠𝐢𝐧 × 𝐒𝐞𝐥𝐥𝐢𝐧𝐠 𝐏𝐫𝐢𝐜𝐞)

𝐂𝐨𝐬𝐭
= 𝐒𝐞𝐥𝐥𝐢𝐧𝐠 𝐏𝐫𝐢𝐜𝐞 − 𝐏𝐞𝐫𝐜𝐞𝐧𝐭𝐚𝐠𝐞 𝐌𝐚𝐫𝐠𝐢𝐧 × 𝐒𝐞𝐥𝐥𝐢𝐧𝐠 𝐏𝐫𝐢𝐜𝐞
= 𝐒𝐞𝐥𝐥𝐢𝐧𝐠 𝐏𝐫𝐢𝐜𝐞 × 𝟏 − 𝐏𝐞𝐫𝐜𝐞𝐧𝐭𝐚𝐠𝐞 𝐌𝐚𝐫𝐠𝐢𝐧

𝐂𝐨𝐬𝐭
𝐒𝐞𝐥𝐥𝐢𝐧𝐠 𝐏𝐫𝐢𝐜𝐞 =
𝟏 − 𝐏𝐞𝐫𝐜𝐞𝐧𝐭𝐚𝐠𝐞 𝐌𝐚𝐫𝐠𝐢𝐧
 Examples:
A home appliance retailer
bought ten electric fans at
₱𝟏, 𝟎𝟓𝟎. 𝟎𝟎 each. He sold each unit
with a 𝟐𝟓% markup based on the
selling price. Find the:
1. selling price for each electric fan;
and
2. margin per electric fan.
 Examples:
A gift shop buys wallets for
₱𝟑𝟎𝟎. 𝟎𝟎 and sells them for
₱𝟑𝟓𝟎. 𝟎𝟎. Find the:
1. percentage margin; and
2. markup rate.
 MARKDOWN
 It is a reduction in the selling price of
merchandise. It is the difference
between the original selling price and
the reduced price.

𝐌𝐚𝐫𝐤𝐝𝐨𝐰𝐧
= 𝐎𝐫𝐢𝐠𝐢𝐧𝐚𝐥 𝐒𝐞𝐥𝐥𝐢𝐧𝐠 𝐏𝐫𝐢𝐜𝐞 − 𝐑𝐞𝐝𝐮𝐜𝐞𝐝 𝐏𝐫𝐢𝐜𝐞
 MARKDOWN
𝐌𝐚𝐫𝐤𝐝𝐨𝐰𝐧
𝐌𝐚𝐫𝐤𝐝𝐨𝐰𝐧 𝐑𝐚𝐭𝐞 =
𝐎𝐫𝐢𝐠𝐢𝐧𝐚𝐥 𝐒𝐞𝐥𝐥𝐢𝐧𝐠 𝐏𝐫𝐢𝐜𝐞

𝐌𝐚𝐫𝐤𝐝𝐨𝐰𝐧
= 𝐌𝐚𝐫𝐤𝐝𝐨𝐰𝐧 𝐑𝐚𝐭𝐞 × 𝐎𝐫𝐢𝐠𝐢𝐧𝐚𝐥 𝐒𝐞𝐥𝐥𝐢𝐧𝐠 𝐏𝐫𝐢𝐜𝐞

𝐑𝐞𝐝𝐮𝐜𝐞𝐝 𝐏𝐫𝐢𝐜𝐞
= 𝐎𝐫𝐢𝐠𝐢𝐧𝐚𝐥 𝐒𝐞𝐥𝐥𝐢𝐧𝐠 𝐏𝐫𝐢𝐜𝐞 × (𝟏 − 𝐌𝐚𝐫𝐤𝐝𝐨𝐰𝐧 𝐑𝐚𝐭𝐞)
 Examples:
A light-emitting diode (LED)
lamp regularly priced at
₱𝟏, 𝟗𝟒𝟖. 𝟎𝟎 is on sale for
₱𝟏, 𝟒𝟗𝟗. 𝟎𝟎. Compute the:
1. markdown; and
2. markdown rate.
 Examples:
During the clearance sale of
a furniture shop, a dining set
originally priced at ₱𝟒𝟐, 𝟎𝟎𝟎. 𝟎𝟎
was sold at a 𝟒𝟎% markdown.
What is the reduced price?
 Examples:
A fish vendor bought 100 kilograms of
bangus at ₱𝟔𝟔. 𝟎𝟎 per kg. 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:
1. original selling price;
2. reduced price; and
3. amount of markdown per kilogram.
 TRADE
DISCOUNTS
 “I CAN” BANK
 I can illustrate how to compute single
trade discounts and discount series.
 I can differentiate profit from loss.
 I can illustrate how profit is obtained and
how to avoid loss in a given transaction.
 I can define breakeven and illustrate
how to determine breakeven point.
 I can solve problems involving buying
and selling products.
 TRADE DISCOUNTS
LIST PRICE
 It is the manufacturer’s suggested
retail price of a product.

TRADE DISCOUNT
 It is the amount deducted from the list
price of a product.
 TRADE DISCOUNTS
A trade discount is usually
expresses as a percentage of the
list price. This percentage is known
as the trade discount rate. The
resulting price after the discount is
applied is called the net price or
the invoice price.
METHODS TO COMPUTE THE
NET PRICE AFTER THE
DISCOUNT
1. Discount Method
2. Complement Method
 DISCOUNT METHOD
𝐃𝐢𝐬𝐜𝐨𝐮𝐧𝐭
= 𝐑𝐚𝐭𝐞 𝐨𝐟 𝐃𝐢𝐬𝐜𝐨𝐮𝐧𝐭 × 𝐋𝐢𝐬𝐭 𝐏𝐫𝐢𝐜𝐞

𝐍𝐞𝐭 𝐏𝐫𝐢𝐜𝐞 = 𝐋𝐢𝐬𝐭 𝐏𝐫𝐢𝐜𝐞 – 𝐃𝐢𝐬𝐜𝐨𝐮𝐧𝐭

𝐃𝐢𝐬𝐜𝐨𝐮𝐧𝐭
𝐑𝐚𝐭𝐞 𝐨𝐟 𝐃𝐢𝐬𝐜𝐨𝐮𝐧𝐭 =
𝐋𝐢𝐬𝐭 𝐏𝐫𝐢𝐜𝐞
 EXAMPLES
An auto supply store sells auto
spare parts for ₱𝟗, 𝟔𝟎𝟎. 𝟎𝟎, subject
to a 𝟏𝟐% trade discount.
Calculate the:
1. amount of trade discount; and
2. net price.
 EXAMPLES
Flor pays ₱𝟑𝟗𝟎. 𝟎𝟎 for a
dress listed at ₱𝟔𝟓𝟎. 𝟎𝟎. What
was the rate of discount?
𝐃𝐢𝐬𝐜𝐨𝐮𝐧𝐭
𝐑𝐚𝐭𝐞 𝐨𝐟 𝐃𝐢𝐬𝐜𝐨𝐮𝐧𝐭 =
𝐋𝐢𝐬𝐭 𝐏𝐫𝐢𝐜𝐞
COMPLEMENT METHOD
𝐂𝐨𝐦𝐩𝐥𝐞𝐦𝐞𝐧𝐭 𝐑𝐚𝐭𝐞
= 𝟏𝟎𝟎% − 𝐓𝐫𝐚𝐝𝐞 𝐃𝐢𝐬𝐜𝐨𝐮𝐧𝐭 𝐑𝐚𝐭𝐞

𝐍𝐞𝐭 𝐏𝐫𝐢𝐜𝐞
= 𝐂𝐨𝐦𝐩𝐥𝐞𝐦𝐞𝐧𝐭 𝐑𝐚𝐭𝐞 × 𝐋𝐢𝐬𝐭 𝐏𝐫𝐢𝐜𝐞
 EXAMPLES
An auto supply store sells auto
spare parts for ₱𝟗, 𝟔𝟎𝟎. 𝟎𝟎, subject
to a 𝟏𝟐% trade discount.
Calculate the net price.
 MULTIPLE DISCOUNTS
A list price of large flat screen
television set is ₱𝟐𝟕, 𝟒𝟓𝟎. 𝟎𝟎 ,
subject to 𝟏𝟎%, 𝟖%, and 𝟓% trade
discounts. Compute the net price
of the television.
 MULTIPLE DISCOUNTS
Rate of Intermediate/
List Price Discount
Discount Net Price

𝟎. 𝟏𝟎 𝟐𝟕, 𝟒𝟓𝟎 ₱𝟐𝟕, 𝟒𝟓𝟎 − ₱𝟐, 𝟕𝟒𝟓

₱ 𝟐𝟕, 𝟒𝟓𝟎 𝟏𝟎% = ₱ 𝟐, 𝟕𝟒𝟓. 𝟎𝟎 = ₱ 𝟐𝟒, 𝟕𝟎𝟓. 𝟎𝟎

𝟎. 𝟎𝟖 𝟐𝟒, 𝟕𝟎𝟓 ₱𝟐𝟒, 𝟕𝟎𝟓 − ₱𝟏, 𝟗𝟕𝟔. 𝟒𝟎

₱ 𝟐𝟒, 𝟕𝟎𝟓 𝟖% = ₱ 𝟏, 𝟗𝟕𝟔. 𝟒𝟎 = ₱ 𝟐𝟐, 𝟕𝟐𝟖. 𝟔𝟎

𝟎. 𝟎𝟓 𝟐𝟐, 𝟕𝟐𝟖. 𝟔𝟎 ₱𝟐𝟐, 𝟕𝟐𝟖. 𝟔𝟎 − ₱𝟏, 𝟏𝟑𝟔. 𝟒𝟑

₱ 𝟐𝟐, 𝟕𝟐𝟖. 𝟔𝟎 𝟓% = ₱ 𝟏, 𝟏𝟑𝟔. 𝟒𝟑 = ₱ 𝟐𝟏, 𝟓𝟗𝟐. 𝟏𝟕
 MULTIPLE DISCOUNTS
𝟏𝟎𝟎% − 𝟏𝟎% = 𝟗𝟎%
𝟏𝟎𝟎% − 𝟖% = 𝟗𝟐%
𝟏𝟎𝟎% − 𝟓% = 𝟗𝟓%

𝐍𝐞𝐭 𝐏𝐫𝐢𝐜𝐞
= 𝐏𝐫𝐨𝐝𝐮𝐜𝐭 𝐨𝐟 𝐂𝐨𝐦𝐩𝐥𝐞𝐦𝐞𝐧𝐭 𝐑𝐚𝐭𝐞𝐬 × 𝐋𝐢𝐬𝐭 𝐏𝐫𝐢𝐜𝐞
= 𝟎. 𝟗𝟎 𝟎. 𝟗𝟐 𝟎. 𝟗𝟓 𝟐𝟕, 𝟒𝟓𝟎
= ₱ 𝟐𝟏, 𝟓𝟗𝟐. 𝟏𝟕
 COMPUTE THE EQUIVALENT
SINGLE DISCOUNT RATE
𝒓 = 𝟏 − 𝟏 − 𝒓𝟏 𝟏 − 𝒓𝟐

𝒓 = 𝟏 − 𝟏 − 𝒓𝟏 𝟏 − 𝒓𝟐 … (𝟏 − 𝒓𝒌 )
 EXAMPLES
A scientific calculator worth
₱ 𝟏, 𝟒𝟗𝟓. 𝟎𝟎 is subject to 𝟏𝟎% and
𝟓% trade discounts. Find the
following:
1. single rate equivalent to the two
trade discounts;
2. net price; and
3. trade discount.
PROFIT AND
LOSS
DETERMINING PROFIT
PROFIT
 It is the difference between gross
revenue and total cost, provided
that the revenue is greater than the
cost.
 It is the amount of money left after
all the costs and payables have
been deducted from the earnings
generated.
DETERMINING PROFIT
𝐏𝐫𝐨𝐟𝐢𝐭 = 𝐑𝐞𝐯𝐞𝐧𝐮𝐞 − 𝐂𝐨𝐬𝐭
where:
𝐑𝐞𝐯𝐞𝐧𝐮𝐞 > 𝐂𝐨𝐬𝐭

𝐔𝐧𝐢𝐭 𝐏𝐫𝐨𝐟𝐢𝐭 = 𝐔𝐧𝐢𝐭 𝐏𝐫𝐢𝐜𝐞 − 𝐔𝐧𝐢𝐭 𝐂𝐨𝐬𝐭

𝐏𝐫𝐨𝐟𝐢𝐭 = 𝐔𝐧𝐢𝐭 𝐏𝐫𝐨𝐟𝐢𝐭 × 𝐐𝐮𝐚𝐧𝐭𝐢𝐭𝐲 𝐒𝐨𝐥𝐝

 EXAMPLES
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 for her store.
Determine her profit for the day, if any.
 EXAMPLES
Juan sells bracelets to earn extra
cash. He sells them for ₱𝟐𝟎. 𝟎𝟎 each.
To produce one bracelet, he spends
₱𝟏𝟕. 𝟎𝟎 for the needed materials. How
much is his profit if he was able to sell
21 bracelets?
 EXAMPLES
Maria owns a small pastry shop that sells
cupcakes. Last month, she was able to sell
𝟏, 𝟎𝟏𝟐 cupcakes for ₱𝟒𝟓. 𝟎𝟎 each. To
produce one cupcake, she has to spend
₱𝟑𝟑. 𝟎𝟎 for the ingredients. Aside from the
cost of goods bought, she also has to pay for
rent and electricity that amount to ₱𝟒, 𝟎𝟎𝟎. 𝟎𝟎
and ₱𝟐, 𝟑𝟎𝟎. 𝟎𝟎, respectively. How much is
her profit for the month, if any?
 EXAMPLES
A small sari-sari store earned a
total of ₱𝟕, 𝟏𝟐𝟒. 𝟎𝟎 last month. On
the other hand, its expenses
included ₱𝟓, 𝟏𝟒𝟓. 𝟎𝟎 for groceries
and ₱𝟐, 𝟏𝟎𝟎. 𝟎𝟎 for electricity. How
much was its profit, if any?
 AVOIDING LOSSES
LOSS OF A BUSINESS
 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.

𝐏𝐫𝐨𝐟𝐢𝐭/𝐋𝐨𝐬𝐬 = 𝐑𝐞𝐯𝐞𝐧𝐮𝐞 − 𝐂𝐨𝐬𝐭

where it is a profit if revenue > cost and a loss
if revenue < cost.
 EXAMPLES
Betty plans to sell customized bags in
an upcoming bazaar. To create one bag,
she has to spend ₱𝟒𝟏𝟐. 𝟎𝟎 for the
materials, and she will sell it for ₱𝟒𝟓𝟎. 𝟎𝟎. To
participate in the bazaar, she has to pay
participation rental fees totaling
₱𝟓, 𝟎𝟎𝟎. 𝟎𝟎. If she was able to create 130
bags, and believes she can sell them all,
should she participate in the bazaar?
 EXAMPLES
Andres designs and produces
customized shirts. He sells them for
₱𝟐𝟓𝟎. 𝟎𝟎 per shirt. Plain shirts cost
him ₱𝟏𝟐𝟎. 𝟎𝟎, and his monthly utilities
(rent and electricity) cost him
₱𝟕, 𝟒𝟏𝟎. 𝟎𝟎. How many customized
shirts should he sell to avoid incurring
losses?
DETERMINING BREAKEVEN
BREAKEVEN
 A business is in breakeven if the total
revenue generated is equal to the total
cost incurred. The number of items that
needs to be sold to attain this is called
the breakeven point.
 It also refers to the amount of revenue
required to attain a profit/loss of 0.
 EXAMPLES
A company sells tablets for
₱𝟒, 𝟑𝟎𝟎. 𝟎𝟎 . If the cost to
produce one table is ₱𝟑, 𝟏𝟎𝟎. 𝟎𝟎,
and the company has a total
fixed cost of ₱𝟑𝟔, 𝟎𝟎𝟎, determine
the company’s breakeven point.