Mathematics oF

selling
SECTION 1:

MARKUP ON COST
TERMS USED IN SELLING

 COST
is the amount paid to the manufacturer supplier after trade and cash have been taken. Shipping and insurance are included in
cost.

 SELLING PRICE
the price at which merchandise is offered for sale to the public

 MARKUP, MARGIN, or GROSS PROFIT

is the difference between the cost and the selling price

 OPERATING EXPENSES or OVERHEAD

include the expenses of operating the business, such as wages and salaries of employees, rent for buildings and equipment, travel

and entertainment, utilities, insurance and advertising.

 NET PROFIT
the amount (if any) remaining for the business after operating expenses and the cost of goods have been paid.
Use the basic formula

Whether markup s based on cost or selling price, the same

basic markup formula is always used: C + M= S, or

Basic Markup Formula Selling Price

P Cost P Operating P Net
Cost C Expense Profit
+ Markup or + M
Selling Price S
Markup/Margin/Gross Profit
EXAMPLE 1 Using the Basic Markup Formula

Most markup problems give two of the items in the formula and ask you to find the third.
Alroy Sports received assorted life vests. Determine the selling price, markup, and cost of the vests in
the ff problems.

C P1,000 C P1,000 C P
(a) +M P 500 (b) + M P (c) + M P 500
S P S P1,500 S P1,500
Calculate markup based on cost
Markup based on cost is expressed as a ercent of cost. As shown in previous discussions the based is
always 100%. Therefore cost has a value of 100%. Markup and selling price also have percent values
found by comparing their peso values to the peso value of the cost. Solve markup problems with the
basic formula C + M = S, or C
+ M
S

Suppose the item costs and sells for P300, and that markup is based o cost. To find markup, percent
of markup on cost, and percent of selling price on cost, begin as follows:

100% C P200
% M P
% S P300
Apply percent to Markup Problems

Knowledge of percent is used to solve markup problems.

EXAMPLE 2. Solving for Percent of Markup on Cost

The manager of Amando Shoes bought some hiking shoes for P3,000 a pair and will sell them for P3,750 a pair. Find the
percent of markup based on cost.

Solution 2

Set up the problem using the basic markup formula.

100% C P3,000 Base

rate ?% M P Portion

rate % S P3,750

Find the percent of markup based on cost, using the formula for rate.
Portion P750
Rate = ---------- = --------- = .25
Base P3000
EXAMPLE 3 Finding Cost When Cost is Base

Alroy Sports has a markup on an iron barbell set of P1,600, which is 50% based
on cost. Find the cost and the selling price.

SOLUTION 3

Set up the problem

100% C P?
50% M P1,600

% S P
EXAMPLE 4 Finding the Markup and the Selling Price

Find the markup and the selling price for a basic calculator if the cost is P236 and the
markup is 25% of cost.

Solution 4

Set up the problem

100% C P236
25% M P?

% S P

Solve for the markup portion.

Portion = Base x Rate = P236 x .25 =

EXAMPLE 5 Finding the cost When cost is Base

Alroy Sports is selling a baseballglove for P1260, which is 140% of the cost. How much did Alroy
Sports pay for the baseball glove?

Solution 5

100% C P?
% M P

140% S P1,260

The rate foe markup is 40%, cannot be used in the formula because there is no corresponding
portion. Solve for base using the corresponding rate and portion.

Portion P1260
Base = = =
Rate 1.4
EXAMPLE 6 Finding the Cost and the Markup

The retail (selling) price of a 6 cubic foot refrigerator is P9,787.50. If the markup is 35% of cost,
find the cost and the markup.

SOLUTION 6

100% C P?
35% M P

S P9,787.50

The rate of markup, 35% cannot be used in the formula since there is no corresponding portion.
Instead, solve for base using the corresponding rate and portion.

Portion P9,787.50
Base = = =
Rate 1.35