Republic of the Philippines

Department of Education
National Capital Region
DIVISION OF CITY SCHOOLS – MANILA
Manila Education Center Arroceros Forest Park
Antonio J. Villegas St. Ermita, Manila

Business Mathematics
Key Concepts in
Buying and Selling

https://images.app.goo.gl/bG24qGKawpzeHpKw9

Quarter 1 Week 6 Module 6

Learning Competency:
Differentiate markup from margins
ABM_BM11BS-lh-3
Describe how gross margins is used in sales
ABM_BM11BS-lh-4
Compute single trade discounts and discount
series
ABM_BM11BS-lh-5
 Learning Module for Business Mathematics

HOW TO USE THIS MODULE?

Before starting the module, I want you to set aside other task/s that will
disturb you while enjoying the lessons. Read the simple instructions below
to successfully enjoy the objectives of this kit. Have fun!

1. Follow carefully all the contents and instructions indicated in

every page of this module.
2. Write on your notebook the concepts about the lessons. Writing
enhances learning, that is important to develop and keep in
mind.
3. Perform all the provided activities in the module.
4. Let your facilitator/guardian assess your answers using the
answer key card.
5. Analyze conceptually the posttest and apply what you have
learned.
6. Enjoy studying!

PARTS OF THE MODULE

• Expectations - These are what you will be able to know after

completing the lessons in the module.
• Pre-test - This will measure your prior knowledge and the concepts
to be mastered throughout the lesson.
• Looking Back to your Lesson - This section will measure what
learnings and skills did you understand from the previous lesson.
• Brief Introduction- This section will give you an overview of the
lesson.
• Activities - This is a set of activities you will perform with a partner.
• Remember - This section summarizes the concepts and applications
of the lessons.
• Check your Understanding - It will verify how you learned from the
lesson.
• Post-test - This will measure how much you have learned from the
entire module

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 Learning Module for Business Mathematics

LESSON
5 Buying and Selling

EXPECTATIONS

As we study and immerse ourselves in “Business Mathematics” in the process,

it is necessary to know some Concepts, Principles and Formulas. The module is
subjected to discuss Module 6 – Buying and Selling.

Specifically, this module will help you to:

a. Differentiate markup from margins;

b. Describe how gross margins is used in sales; and
c. Compute single trade discounts and discount series

Let us start your journey in

learning more on buying and selling.
I am sure you are ready and excited
to answer the Pretest. Smile and
PRETEST Enjoy!

Directions: Calculate the following Trade discounts and net prices.

TRADE
LIST PRICE TRADE DISCOUNT NET PRICE
DISCOUNT RATE
1. P286,000 25%
2. P134,790 40%
3. P21,290 18%
4. P959,000 55%
Chua, Simon L., et.al, 2018 Soaring 21st Century Mathematics Grade 11 Business Mathematics. p.132 Quezon City,
Philippines. Phoenix Publishing House.

Great, you finished answering the

questions. You may request your
facilitator to check your work.
Congratulations and keep on learning!
LOOKING BACK TO YOUR LESSON

In business, in order to make a profit, it is necessary to sell items for more

than business owners paid for them. The difference between the cost of an item
and the selling price is called the markup. The markup can be a percentage of
the cost or a percentage of the selling price.

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 Learning Module for Business Mathematics
Sometimes it is necessary to reduce the selling price of an item. In this
case, it is called a markdown. Many times items are marked up and then
marked down, and so on. This is a series of markups and
markdowns. (Bluman, A., 2006)
In Buying and Selling, buyers and sellers must be
both winners after the transaction. Buyers having quality
product and the seller having profit.
https://images.app.goo.gl/FsMzdRpc8NxaGi6S8

Let’s do this!
Directions: Answer the following:

1. Discount Electronics purchased Ultra High Definition TV (UHD TV) sets

for P14,250 each. Discount Electronics sells the UHD TV for P19,999 each.
What is the markup on each set?
2. Find the markup and selling price on a computer keyboard that costs P575
if there is a 35% markup rate on cost.
Chua, Simon L., et.al, 2018 Soaring 21st Century Mathematics Grade 11 Business Mathematics. pp.149-150 Quezon
City, Philippines. Phoenix Publishing House.

BRIEF INTRODUCTION

DIFFERENCE BETWEEN MARKUP

AND MARGIN
Markup refers to the amount
added to the cost price of a product
or service cover expenses and profit.
It is the difference between cost price
and selling price.
Example: https://images.app.goo.gl/Djj3ieBvtxnSnbKr6
If an item costs P2,000 and the markup is 20%, the resale is P2,400
(the original cost plus the 20%). The simple calculation is the cost
multiplied by the percentage +1.
Solution: Convert the percentage into decimal
P2,000 (0.20+1)
=P2,000 (1.20)
=P2,400

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 Learning Module for Business Mathematics
Margin, short for ‘profit margin’, is the percentage of a resale price that is
profit.
Example:
If an item costs P2,000 and the profit margin is 20% the resale is
P2,500 (the profit of P500 is 20% of the P2,500 resale). The simple
calculation is the cost divided by 1 minus the percentage.
Solution:
P2,000 ÷ (1-0.20)
=P2,000÷0.80
=P2,500
Chua, Simon L., et.al, 2018 Soaring 21st Century Mathematics Grade 11 Business Mathematics. p.154 Quezon City,
Philippines. Phoenix Publishing House.

GROSS MARGIN USED IN SALES

Gross margin is a company's net
sales revenue minus its cost of goods
sold (COGS). It is the sales revenue that
the company retains after incurring the
direct costs associated with producing
the goods it sells, and the services it
provides.
The higher the gross margin, the
more capital a company retains on each
peso of sales, which it can then use to
pay other costs or satisfy debt
obligations.
https://images.app.goo.gl/HzX5zFyVK7CUYzzb9
Formula:
Gross Margin=Net Sales−COGS

To illustrate an example of a gross margin calculation, imagine that a

business collects P200,000 in sales revenue. Let us assume that the cost of goods
consists of the P20,000 it spends on manufacturing supplies, plus the P80,000
it pays in labor costs. Therefore, after subtracting its COGS, the company boasts
P100,000 gross margin.

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 Learning Module for Business Mathematics
The gross margin represents the portion of each peso of revenue that the
company retains as gross profit. For example, if a company's recent quarterly
gross margin is 35%, that means it retains P0.35 from each peso of revenue
generated. Because COGS have already been taken into account, those
remaining funds may consequently be channeled toward:
a. paying debts;
b. general and administrative expenses;
c. interest fees; and
d. dividend distributions to shareholders.
Companies use gross margin to measure how their production costs relate
to their revenues.
✓ if a company's gross margin is falling
✓ it may strive to slash labor costs or source cheaper suppliers of
materials. it may decide to increase prices, as a revenue increasing
measure.
✓ measure company efficiency or to compare two companies of different
market capitalizations.
Bloomenthal, Andrew., 2020 Gross Margin Definition.
https://www.investopedia.com/terms/g/grossmargin.asp#:~:text=Gross%20margin%20equates%20to%20net,%2C%20ge
neral%2C%20and%20administrative%20costs. Retrieved July 3, 2020

SINGLE TRADE DISCOUNTS AND DISCOUNT SERIES

In business, when a
manufacturer sells an item to the
wholesaler, the manufacturer
deducts a certain amount from
the list price of the item. The
amount deducted is called the
trade discount. The wholesaler
pays the net price, which is the
difference between the list price
and the trade discount. Likewise,
the wholesaler discounts the list
price when selling to the retailer.
The discount rate that the
wholesaler gives the retailer is https://images.app.goo.gl/kyfR9oyTtj4kV9Yt6
smaller than the discount rate that the manufacturer gives the wholesaler. The
consumer then pays the list price.

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 Learning Module for Business Mathematics
Consumer Retailer Wholesaler Manufacturer
List Price Net Price Net Price Cost
30% discount 50% discount
of list price of list price
P800 P560 P400 P200

The trade discount is not usually stated in the published catalog. Instead,
the wholesaler or retailer calculates it using the list price and the discount rate.
The discount rate is a percent of the list price.
The manufacturer makes available lists of discount rates for all items in
the catalog. The discount rates vary considerably depending on such factors as
the wholesaler’s and retailer’s purchasing history, the season, the condition of
the economy, whether a product is being discontinued, and the manufacturer’s
efforts to encourage volume purchases. Each time the discount rate changes, the
manufacturer updates the list of discount rates. Each new discount rate applies
to the original list price in the catalog.

The wholesaler purchases The manufacturer

merchandise from the Trade Sale converts raw
manufacturer and resells material into the
it to the retailer final product

Trade Sale Trade Sale

https://images.app.goo.gl/b5axKSn1ebEaMjwp6 Retailer https://images.app.goo.gl/gRcRvgzCbY7T97EMA

Retail Sale

Ultimate
Consumer
https://images.app.goo.gl/1ypaVgMSJ9QTiV1H9

The General Type of Trade and Retail Sales Patterns

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 Learning Module for Business Mathematics
INTRODUCTION TO TRADE DISCOUNT
How to find the trade discount using a single
trade discount rate.
1. Identify the single trade discount rate and
the list price.
2. Multiply the list price by the decimal
equivalent of the single trade discount
rate.
Trade discount= Single Trade Discount
Rate X List Price
Since the trade discount is deducted from
the list price to get the net price, and once
we know the trade discount, we can
calculate the net price. https://images.app.goo.gl/3hhF4X2sCc8hLBfy8

How to find the net price using the trade discount

1. Identify the list price and trade discount.

2. Subtract the trade discount from the list price.
Net Price=List Price-Trade discount
Example 1:
A manufacturer of tents offers a sporting goods store a trade discount of
35% on a kid’s tent that has a list price of P98. Find the amount of the discount
and the net price.
Solution:
Trade discount = Rate × List price
= 0.35 × P98
= P34.30
Net price = List price − Trade discount
= P98 − P34.30
= P63.70
The discount is P34.30 and the net price is P63.70.

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 Learning Module for Business Mathematics
Example 2:
Great Wall Shop sells an item for P100,000 less 20%, while Yellow River
Shop sells the same item for P120,000 less 40%;
(a) Find the net prices of the items in the two shops.
(b) What further discount percent must be offered by the shop that sells at a
higher net price in order to meet the competitor’s price?
Solution:
(a) Great Wall Shop:
Net Price= 100,000 – (20% of 100,000) = P80, 000
Yellow River Shop:
Net price= 120,000-(40% of 120,000) =P72, 000
(b) Great Wall Shop sells at a higher net price. Let the additional discount
percent be r%.
Then
72 000=100 000-r% of 100 000
72 000=100 000 (1-r%)
So, we have r=28%
Thus, Great Wall Shop must offer an additional 8% to meet its
competitor’s price.

TIP!
The net price can be found by using the complement of the rate
(subtract the rate from 100%).
Example:
The complement of 60% is 100% – 60% = 40%.
The net price can be found by multiplying the list price by the
complement of the trade discount rate or Net price(N) = (100% − R%) × List
price

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 Learning Module for Business Mathematics
The complement of a single trade discount rate can be used to find the net
price. Observe the relationship among the rates for the list price, discount, and
net price.
List Price Rate Trade Discount Net Price
100% 25% of list price 75% of list price
100% 20% of list price 80% of list price
100% 40% of list price 60% of list price
100% 50% of list price 50% of list price

Since the complement is a percent, it is a rate. The complement of a trade

discount rate is the net price rate. The single trade discount rate is used to
calculate the amount the retailer does not pay: the trade discount. The net
price rate is used to calculate the amount the retailer does pay: the net price.
Example:
Find the net price of a computer that has a list price of P32,000 with a
trade discount rate of 35%
Solution:
Let us find the net price rate by subtracting the single trade discount rate
from 100%; that is, 100% -35%=65%.
Now, we have
Net Price=65% of 32 000
= 0.65 (32 000)
= P20 800.

TRADE SERIES DISCOUNT

Sometimes, a manufacturer wants

to promote a particular item or
encourage additional business from a
buyer. Also, buyers may be entitled to
additional discounts as a result of buying
large quantities. In such cases, the
manufacturer may offer additional
discounts that are deducted from the list
price one after another.
Such discounts are called a trade
series discount or chain discounts.
https://images.app.goo.gl/9m9agVmrgc4HvGJQ9

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 Learning Module for Business Mathematics
Example:
A series discount is P400,000 (list price) with a series discount of 20/10/5
(discount rates).
✓ 20% of the list price is deducted from the list price to find the first
net price.
✓ 10% of the first net price is deducted to find the second net price
✓ 5% of the second net price deducted to determine the final cost to
the buyer.
**Note: It does not mean a total discount of 35% is allowed on the original
list price.
Using the example in p.10, this process is illustrated below:
(0.2) P400,000= P80,000
P400,000-P80,000=P320,000 The first discount is taken from the
list price of P400,000, which leaves
P320,000.
(0.1) P320,000=P32,000
P320,000-P32,000=P288,000 The second discount is taken from
P320,000, which leaves P288,000.
(0.05)P288, 000=P14, 400
P288,000-P14,400=P273,600 The third discount is take from
P288,000, which leaves the net price
of P273,600.
When calculating the net price after a series of trade discounts, you cannot
find the sum of the discounts and then multiply the list price by that sum.
The reason is that in a trade series discount, each discount after the first one is
completed by using the previous net price.
Thus, the net price of P400,000 with a trade series discount of 20/10/5 is
P273,600.
It is time-consuming to calculate a trade series discount this way. The
business world uses a faster way of calculating the net price of a purchase when
a series of discounts is taken.
A shortcut method can be used by multiplying by the complement of each
discount. There is a mathematical procedure to find a single discount that is
equivalent to a series of trade discounts. This procedure is shown in the next
example.
Step 1. Find the complements of the trade discounts.
The complement of 25% is 100% − 25% = 75%.
The complement of 15% is 100% − 15% = 85%.
The complement of 5% is 100% − 5% = 95%.

11
 Learning Module for Business Mathematics
Step 2. Change each complement to a decimal and find the product.
0.75 × 0.85 × 0.95 = 0.606 (rounded)
Step 3. Change the product to a percent and subtract from 100%.
0.606 = 60.6%
100% – 60.6% = 39.4%
Hence a trade discount series of 25/15/5 is equivalent to a single trade
discount of 39.4%.

ACTIVITIES

Directions: Solve the following problems. Write your answer in the yellow pad.
PRACTICE:
1. The list price of a jumping rope is P300. The manufacturer offers a 48% trade
discount. Find the amount of the discount and the net price.
2. The list price of 1 dozen men’s shirts is P180. If a trade discount of 65% is
offered, find the amount of the discount and the net price.
3. The list price of a handy blender is P300. If a trade discount of 35% is offered,
find the amount of the discount and the net price.
4. The list price of a barbeque grill is P200. If the manufacturer offers a trade
discount of 25%, find the amount of the discount and the net price.
5. The list price of a pressure washer hose is P340. A 30% trade discount is being
offered. Find the amount of the discount and the net price.
Bluman, Allan G., 2006 Business Math Demystified A Self Teaching Guide. Pp.118-119;. United States of America. McGraw-
Hill Companies, Inc

REMEMBER

• Gross margin equates to net sales minus the cost of goods sold.
• The gross profit margin shows the amount of profit made before deducting
selling, general, and administrative costs.
• Gross margin can also be shown as gross profit as a percent of net sales.
• The single trade discount rate is used to calculate the amount the
retailer does not pay: the trade discount. The
net price rate is used to calculate the amount
the retailer does pay: the net price.
• Trade series discount or chain discounts
are the manufacturer possible offer for additional
discounts that are deducted from the list price
one after another.
https://images.app.goo.gl/ERBeiEnXn5fMkEtc9

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 Learning Module for Business Mathematics

CHECK YOUR UNDERSTANDING

MULTIPLE CHOICE.
Directions: Solve the following problems. Choose the letter of the best answer.
1. A carton containing puzzles has a list price of P59. If a 30% trade discount
is offered, find the net price.
A. P17.70 C. P100.30
B. P76.70 D. P41.30
2. Find the net price of a chair that has a list price of P375 if a trade discount
series of 10/5/3 is offered.
A. P311.01 C. P67.50
B. P63.99 D. P307.50
3. Find the single trade discount that is equivalent to a trade discount series
of 20/10/5.
A. 0.1% C. 31.6%
B. 68.4% D. 35%
4. Juan Arillo received a bill dated October 6 for P445. The terms were
3/10 , 2/15 , n/30 . Juan paid the bill on October 19. How much did he pay?
A. P445.00 C. P436.10
B. P431.65 D. P422.75
5. A 15% trade discount was offered on a clock costing P98. The terms of
sale were 3/15 , n/30. Find the amount of the payment if the bill was paid
within 15 days.
(a) P83.30 (c) P80.80
(b) P82.70 (d) P95.06
Bluman, Allan G., 2006 Business Math Demystified A Self Teaching Guide. pp. 136-137. United States of America.
McGraw-Hill Companies, Inc

POSTTEST

Directions: Solve the problem given below.

PRACTICE:
1. A saw has a list price of P180. A trade discount series of 10/5 is offered. Find
the amount of the discount and the net price.
2. A garage door knob has a list price of P210. A trade discount series of 10/5/3
is offered. Find the amount of the discount and the net price.
3. A big Eco bag has a list price of P30.00. For a sale, a 40% discount is offered
followed by a 10% discount. Find the net price and the amount

13
 Learning Module for Business Mathematics
of money that has been saved.
4. Find a single trade discount that is equivalent to a discount series of 12/8.
5. Find a single trade discount that is equivalent to a discount series of
18/12/6.
Bluman, Allan G., 2006 Business Math Demystified A Self Teaching Guide. pp. 124-125;. United States of America.
McGraw-Hill Companies, Inc

REFLECTIVE LEARNING SHEET

Online selling is one of the platforms that is

https://images.app.goo.gl/dKbJKiszLJrjYTA56
booming this time of pandemic. This is
because, most of the people try to avoid in
going out to be able for them not to be exposed
to populated areas which may be too risky for
their health.
E-commerce companies such as Shopee and
Lazada offers multiple discounts to their e-
customers in order for them to be attracted to
buy on the said e-commerce companies. It can
be in a form of vouchers, discounts given by
their partner companies, coins, and other
promos alike.
For you, how do trade series discount helps
the e-commerce companies to continuously
grow?

____________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________.

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 Learning Module for Business Mathematics

E-SITES

To further explore the concept learned today and if it possible to connect

the internet, you may visit the link:
https://www.slideshare.net/alvinbangga/cash-discount-and-trade-
discount

REFERENCES

Bluman, Allan G., 2006 Business Math Demystified A Self Teaching Guide. pp.
117-126;. United States of America. McGraw-Hill Companies, Inc

Chua, Simon L., et.al, 2018 Soaring 21st Century Mathematics Grade 11 Business
Mathematics. pp. 124-129. Quezon City, Philippines. Phoenix
Publishing House.
Licuanan, Patricia B., et.al, 2016 Teaching Guide for Senior High School
Business Mathematics.pp.85-99. Quezon City, Philippines. CHED.

Bloomenthal, Andrew., 2020 Gross Margin Definition.

https://www.investopedia.com/terms/g/grossmargin.asp#:~:text
=Gross%20margin%20equates%20to%20net,%2C%20general%2C
%20and%20administrative%20costs. Retrieved July 3, 2020

Module Images:
https://images.app.goo.gl/bG24qGKawpzeHpKw9. Retrieved June 27, 2020
https://images.app.goo.gl/FsMzdRpc8NxaGi6S8. Retrieved June 29, 2020
https://images.app.goo.gl/Djj3ieBvtxnSnbKr6. Retrieved July 13, 2020
https://images.app.goo.gl/HzX5zFyVK7CUYzzb9. Retrieved July 13, 2020
https://images.app.goo.gl/kyfR9oyTtj4kV9Yt6. Retrieved July 13, 2020
https://images.app.goo.gl/b5axKSn1ebEaMjwp6. Retrieved July 13, 2020
https://images.app.goo.gl/gRcRvgzCbY7T97EMA. Retrieved July 13, 2020
https://images.app.goo.gl/3hhF4X2sCc8hLBfy8. Retrieved July 13, 2020
https://images.app.goo.gl/9m9agVmrgc4HvGJQ9. Retrieved July 13, 2020
https://images.app.goo.gl/ERBeiEnXn5fMkEtc9. Retrieved July 13, 2020
https://images.app.goo.gl/dKbJKiszLJrjYTA56. Retrieved July 13, 2020

15
 Learning Module for Business Mathematics

Acknowledgements

Writers: Clarabelle V. Dalimit, DEM

Jupiter Whiteside, MBA

Editor: Isabel A. Gumaru, DBA

Evaluator: Ellaine I. Dela Cruz, DBA

Validator & Reviewer:

Remylinda T. Soriano, EPS, Math
Angelita Z. Modesto, PSDS
George B. Borromeo, PSDS

Management Team:
Maria Magdalena M. Lim-Schools Division
Superintendent-Manila
Aida H. Rondilla-Chief Education Supervisor
Lucky S. Carpio-EPS
Lady Hannah C Gillo, Librarian II-LRMS

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 Learning Module for Business Mathematics

ANSWER KEY

PRE-TEST CHECK YOUR UNDERSTANDING

TRADE NET 1. D
DISCOUNT PRICE 2. A
1. P71,500 P214,500 3. C
2. P53,916 P80,874 4. C
3. P3,832.20 P17,457.80 5. C
4. P527,450 P431,550
POST TEST
LOOKING BACK TO YOUR LESSON 1. N=P153.90
1. P5,749 Trade discount = P26.10
2. Mark up: P201.25 2. N = P174.16
Selling Price: P776.25 Total discount = P35.84
3. N = P16.20
ACTIVITIES D =13.80
1. P156 4. The complement of 12% is 88%.
2. T = P117 The complement of 8% is 92%.
N =P63 0.88 × 0.92 = 0.8096
0.8096 = 80.96%
3. T = P105
100% − 80.96% = 19.04%
N = P195
5. 100% − 18% = 82% = 0.82
4. T = P50 100% − 12% = 88% = 0.88
N = P150 100% − 6% = 94% = 0.94
5. T =P102 0.82 × 0.88 × 0.94 = 0.678304 =
N = P238 67.8304%
100% − 67.8304% = 32.1696% or
32.17% (rounded)

17