BUYING & SELLING

Mark-up
& Gross Margin
MARK - UP
Module 4
ACTIVITY NO. 1
Identify familiar business and their product. (yellow paper ½
crosswise)
BUSINESS PRODUCT
EXAMPLE: JOLLIBEE SPAGHETTI, FRIES, BURGER, COKE FLOAT

1.

2.

3.

4.

5.
Definition of terms
Mark up – amount of money added to cost to cover the
operating expences and provide a profit to the business.
Selling price – the price at which the items is actually
sold.
Cost – the price that includes all the expenses in the
production of the product.
Mark up rate – a percentage of the cost to be added
to determine the selling price of the product.
How to determine the mark – up value?
Mark up percentage varies greatly depending on the nature
of business. There is no specific mark – up percentage that
applies to all, but there may be an average for a particular
business.
Some of the things that need to be consider.
 How much profit does the business want?
 How much does the business need to cover all expenses?
 How much the competitors sell their product or service?
 Who is your target market?
 What quality of service would you like to provide?
 Always take note that the selling
price must be reasonable, competitive,
and suitable to its target market. And it
will not make business to lose money.
Computation for mark – up
Formula in finding the selling price with mark – up based on
cost.
Step 1: Mark – up = mark-up rate x cost
MU=MUR
xC
Step 2: Selling Price = cost + mark-up
SP = C +
MU
Mark up Rate = x 100
MUR = x 100
Example: Finding the selling price.
1. Marisol bought bags for her
store Php 600 each. To make her
desire profit. Marisol must mark-up
each bag 32% on cost. What must be
the selling price of the bag?
Solution:
Given:
Cost: Php 600 Mark-up rate = 32% or 0.32

Step 1: find the mark-up use the formula

MU = MUR x C
MU = 0.32 x Php 600
MU = Php 192

Step 2: find the selling price use the formula The selling price of
SP = C + MU Marisol’s bag is
792192
SP = Php 600 x Php pesos.
SP = Php 792
Example: Finding the cost.
2. A pair of shoes is mark–up at
Php 2,100 which is 60% mark–up
based on cost. What is the cost of
the shoes?
Solution:
Given:
selling price: Php 2,100 Mark-up rate = 60% or 0.60

Step 1: find the mark-up use the formula

MU = MUR x C
MU = 0.60 x C
MU = 0.60C

Step 2: find the selling price use the formula

SP = C + MU The cost of the shoes
2100 = C x 0.60C
is 1,312.50 pesos.
C = Php 1312.50
Example: Finding the mark-up rate.
3. A laser printing costing Php
8,750 is sold for Php 12,250. find
the mark up rate based on cost?
Solution:
Given:
selling price: Php 12,250 cost = Php 8,750

Step 1: find the mark-up use the formula

SP = C + MU
12,250 = 8,750 + MU
12,250 – 8750 = MU
3,500 = MU
Step 2: find the selling price use the formula
MU = MUR x CThe mark-up rate
3,500 = MUR xbased
8,750 on cost in laser
printing
MUR = 0.40 or 40% is 40%.
Computation of mark – up
Formula in finding the selling price with mark – up based on
selling price.
Step 1: Mark – up = mark-up rate x selling price
MU=MUR
x SP
Step 2: Cost = Selling Price – mark-up
C = SP –
MU
Example: Finding the cost.
what is the cost of an item that
has a selling price of Php 240 and
a mark-up rate of60% based on
selling price.
Solution:
Given:
selling price: Php 240 Mark-up rate = 60% or 0.60

Step 1: find the mark-up use the formula

MU = MUR x SP
MU = 0.60 x 240
MU = 144
Step 2: find the cost use the formula The cost of the item is
C = SP – MU96 pesos.
C = 240 – 144
C= 96
Example: Finding the mark-up.
JPD sports Inc. sells home-
gymnasium package for Php 175,000
and maintains a mark-up rate of 37%
on selling price. What is the mark-up
value?
Solution:
Given:
Selling price: Php 175,000
Mark-up rate = 37% or 0.37

Step 1: find the mark-up use the formula

MU = MUR x SP
MU = 0.37 The Mark-up value
x 175,000
MU = 64,750is Php 64,750
 MARK – UP vs
GROSS MARGIN
MARK-UP vs GROSS MARGIN

Mark - up Gross Margin

Added price to the A term that relates the

product to cover its mark up and the selling
cost and earn profit. price
GROSS
MARGIN
Gross Margin
 It is a percentage that presents how
much the earned profit of a business
based on its revenue.
 It is a quick indicator of the profit
available to cover cost.
Formula of finding the Gross Margin.

Gross Margin =
GM =
Example: Finding the Gross Margin.
a cosmetic retailer puts a storewide
mark-up rate of 40% on its makeup
product. If the cost of a lipstick is Php
150. compute for the Gross margin
and interpret its value.
Solution:
Given:
Cost: Php 150 Mark-up rate = 40% or 0.40

Step 1: find the mark-up use the formula Step 3: find the Gross margin use the
MU = MUR xC
formula;
MU = 0.40 x 150GM =
MU = 60
Step 2: find the selling price use the formula
GM =
SP = C + MU GM = 28.75%
SP = 150 + 60
SP = 210
This means that 28.75% of
selling price is your profit.
Remember:
• Mark-up – amount of money added to cost to cover the operating
expenses and provide a profit to the business.
• Gross Margin – It is a percentage that presents how much the earned
profit of a business based on its revenue.
Based on Cost
Step 1: Mark – up = mark-up rate x cost MU =
MUR x C
Step 2: Selling Price = cost + mark-up SP = C +
MU

Based on Selling Price

Step 1: Mark – up = mark-up rate x selling price MU = MUR x SP
Step 2: Cost = Selling Price – mark-up C = SP –
ASSIGNMENT NO.1
1.A car dealer advertises a 7% mark up over cost. Find
the selling price of a car that cost the dealer $13,000.
2.An item costing $46 is being sold for $69. find the
Mark-up and Mark-up Rate
3.A computer store uses a mark-up rate of 45%. If a
computer sells for $580, what was the cost of the
computer?