Buying

and
Selling
What am I?
PRICE
MARGIN
 +
MARK-UP
 +
DISCOUNT PRICE/
SALE PRICE
 +
MARK-DOWN
 +
MARK-ON
Objectives
At the end of our lesson, you will learn to:

• Differentiate Mark-on,
Mark-down, and Mark-up
• Obtain Mark-on, Mark-down, and
Mark-up given the price of a product
• Differentiate Mark-ups and margins
• Solve problems involving buying and
selling.
Buy and Sell
Agreement
a legally binding contract that stipulates
how a partner's share of a business may be
reassigned if that partner dies or otherwise
leaves the business.
 Cost Price
• the price that a company or store has to pay for the
goods it is going to sell
Definition of • the price that has to be spent to produce goods or
services before any profit is added

Terms Example: the cost price refers to the price of the raw
materials needed to produce a banana cue.
 Operating Cost
• the price (per unit) incurred relative
to the production and sale of a commodity
Definition of Example: the operating cost would be those
Terms additional expenses that have to be incurred in the actual
selling of the banana cue such as rent, salaries of
manpower and other incidental expenses.
 Selling Price
• the price at which the commodity is
sold per unit

Definition of Profit
Terms • money earned after the cost price and
the operating costs are accounted for after the
sale of a commodity

Example: the profit would be the difference

between the selling price and the total costs of the raw
materials and other expenses.
 To compute for the
SELLING PRICE
$15 SELLING PRICE = COST PRICE +
OPERATING COST + PROFIT

$25 S=C+E+P

S = Selling Price
C = Cost Price
$40 E = Operating Cost
P = Profit
 Mark-Up
• the difference between the selling price and the cost
price; sometimes referred to
as MARGIN or GROSS PROFIT
Definition of
Terms
 To compute for the
MARK-UP
$15 MARK-UP = SELLING PRICE -
COST PRICE

$25 MU = S - C

MU = Mark-up
S = Selling Price
$40 C = Cost Price
Mark-up vs Margin
Margin
This is the mark-up based on sales or
selling price.

Mark-up
This is the mark-up based on cost.
Mark-up vs Margin
Margin
For example, if a profit sells for ₱200 and costs ₱140 to
manufacture, its gross margin is ₱60. Stated as a percent, the
margin is 30% (calculated as the margin divided sales).

Mark-up
For example, a mark-up of ₱60 to the ₱140 cost yields the ₱200
selling price. Stated as a percentage, the mark-up percentage is
42.86% (calculated as the mark-up divided by the product cost).
Example
1. Aling Ana would like to sell little trinkets she purchased
from Divisoria for ₱12 each. If the operating cost is set at 25%
of the cost and she would like to have a 15% profit on the cost
of each item,
a. Determine the mark – up price for each trinket.
b. Help Aling Ana determine the selling price for each trinket.
Example
a. Determine the mark – up price for each trinket.
Solution:
Since MU = S – C and S = C + E+ P ,
then MU = C + E + P - C
it follows that MU = E + P

MU = E + P
= (0.25 × 12) + (0.15 ×12)
= 3 + 1.90
=₱4.80

The mark-up price for each trinket is ₱4.80.

Example
b. Help Aling Ana determine the selling price for each trinket.

Solution:
Since MU = S - C, by algebraic manipulation
(Addition Property of Equality), it follows that

S = C + MU
= 12 + 4.80
= ₱16.80

Aling Ana should sell each trinket at ₱16.80.

Example
2. A jacket which costs ₱1,350 is being sold at ₱2,025. What is
the rate of mark-up based on the cost?
Solution:
 

Mark-up based on its cost:

Rate of Mark-up

MUC% = 50%

The jacket has a 50% mark-up based on its cost.

Example
3. Julia buys a notebook cost of ₱45. The rate of mark-up based
on cost is 25%. Find the selling price and the mark-up.
Solution:

MU = 0.25 × 45
= ₱11.25

S = 45 + 11.25
= ₱56.25

The selling price of Julia’s notebook is ₱56.25 which includes a mark-up of

₱11.25.
Example
4. A top costs Mang Mario ₱280 and he decides to mark up it
by 30% of the selling price. Find the selling price and mark-up
for the said top.
Solution:

100%-30%=70% (Cost of top is 70% of the selling price)

C = 0.70S
280 = 0.70S
S = 280/0.70
=₱400

Mang Mario sells the top at ₱400.

MU=S-C=400-280=₱120
The mark-up on the top is ₱120.
Example
5. Find the cost and mark-up of a box of pencils sold for ₱135
with a 25% mark-up based on selling price.
Solution:

MU = 0.25 × S
= 0.25 × 135
= ₱33.75

C = S – MU
= 135 -33.75
= ₱101.25

The cost price of the box of pencils is ₱101.25 and the mark-up is ₱33.75.
Mark-on
Some businesses will want to take advantage of peak seasons and
thus, increase the prices already pegged for their commodities. This
is what we called MARK-ON.

There are other reasons why a mark-on becomes an option for a

business owner. These are some:
· A calamity has hit the source of a raw material or commodity
therefore affecting its supply
· Seasonal demands (Christmas items, Valentines, etc.)
· Special occasion is being celebrated (commemorative, death
anniversary, etc.)
Mark-on
To compute for the MARK-ON:
MARK-ON = PEAK SELLING PRICE – REGULAR SELLING PRICE
MO= PS - S

where PS = Peak Selling Price

S = Regular Selling Price
Example
1. Manang Crising observes that market goers prefer to buy fish
from her because there is an undersupply of meat in the market this
season. She then decides to increase the price of galunggong by ₱10
per kilo. If the cost of galunggong is ₱90 per kilo with a 35% mark-up,
what is its new selling price with the additional increase of ₱10? By
how much is the rate of mark-up based on cost increased by adding
₱10 to the regular selling price of the galunggong?
Solution:

MU = 0.35 × S Selling Price before increase: Selling Price after increase:

= 0.35 × 90 S = C + MU PS = S + MO
= ₱31.50 = 90 + 31.50 = 121.50 + 10
= ₱121.50 = ₱131.50
Example
1. Manang Crising observes that market goers prefer to buy fish
from her because there is an undersupply of meat in the market this
season. She then decides to increase the price of galunggong by ₱10
per kilo. If the cost of galunggong is ₱90 per kilo with a 35% mark-up,
what is its new selling price with the additional increase of ₱10? By
how much is the rate of mark-up based on cost increased by adding
₱10 to the regular selling price of the galunggong?
Solution:
Combined Rate of Mark-up and Mark-on
=(31.50+10)/90×100%
=46.11%

46.11-35=11.11%

The mark-up is increased by 11.11% by the additional mark-on ₱10 imposed by Manang
Crising.
Example
2. Yvette’s Flower Shop imposes a 45% mark-up on flowers delivered
to them for sale. During All Saint’s Day, however, an additional mark-
on of 25% of the regular selling price is added on. Determine the unit
price of 300 roses worth P15,000 delivered to Yvette’s Flower Shop
during All Saint’s Day. How much is the selling price of each rose
during All Saint’s Day at this flower shop?

Solution:
Unit Price =15,000/300=₱50

MU = 0.45 × C = 0.45 ×50 = ₱22.50

S = C + MU = 50 + 22.50 = ₱72.50
Example
2. Yvette’s Flower Shop imposes a 45% mark-up on flowers delivered
to them for sale. During All Saint’s Day, however, an additional mark-
on of 25% of the regular selling price is added on. Determine the unit
price of 300 roses worth P15,000 delivered to Yvette’s Flower Shop
during All Saint’s Day. How much is the selling price of each rose
during All Saint’s Day at this flower shop?

Solution:
MO = 0.25S = 0.25 (72.50) = ₱18.125

PS = S + MO = 72.50 + 18.125 = ₱90.625

Each rose sells for ₱90.625 at Yvette’s Flower Shop during All Saint’s Day.
Running a business is not an easy task.
Sometimes the sale is coming in slow.
You may need to sell it at a
DISCOUNTED PRICE or what is
commonly known as the SALE PRICE.
Mark-down
The difference between the REGULAR SELLING PRICE and the SALE
PRICE.

Mark-downs commonly happen when the mall

decides to sell their items at cut down prices to clear their warehouse
collection. Some of the reasons are the following:
· The item is a perishable item and its best to dispose of it sooner than
simply throw it away
· The item has become dirty or worn out, or possibly out of style
· Competition forces the marking down of an item
Mark-down
To compute for the MARK-DOWN:
MARK-DOWN = SELLING PRICE – SALE PRICE
MD= S - SP

where MD = Mark-Down
S = Selling Price
SP = Sale Price
Example
1. Carlo was able to buy a pair of shoes regularly priced at ₱3,500
for only ₱2,100.
a. What was the amount of the mark-down?
b. What was the rate of the mark-down?

Solution:
MD = S – SP = 3,500 – 2,100 = ₱1,400

Mark-down based on its selling price:

MD% = MD/S×100%
= 1,400/3,500 ×100%
= 40%

The amount of mark-down is ₱1,400 which is equivalent to a 40% mark-down.

Example
2. During a Midnight Madness Sale, a board game regularly priced at
₱8,500 was sold at 55% discount. The cost of the board game is
₱3,450 and expenses are 14% of the regular selling price. What was
the amount of the mark-down?

Solution:
100%-55%=45% (The sale price is 45% of the selling price.)

SP = 0.45 × S
= 0.45 × 8,500
= ₱3,825

The sale price of the board game is ₱3,825.

Example
3. Super Mall paid ₱15,000 for a set of dishes. Expenses are 18% of
the selling price while the required profit is 15%of the selling price.
During an inventory sale, the set of dishes was marked down by 30%.
a. What was the regular selling price?
b. What was the sale price?
Solution:
a.
S=C+E+P
S = C + 0.18 S + 0.15 S
S - 0.18 S – 0.15 S = 15,000
0.67 S = 15,000
S = 5,000/0.67
=₱22,388.06

The regular selling price of the set of dishes is ₱22,388.06.

Example
3. Super Mall paid ₱15,000 for a set of dishes. Expenses are 18% of
the selling price while the required profit is 15%of the selling price.
During an inventory sale, the set of dishes was marked down by 30%.
a. What was the regular selling price?
b. What was the sale price?
Solution:
b.
100%-30%=70% (The sale price is 70% of the selling price.)
SP = 0.70 × S
= 0.70 × 22,388.06
= ₱15,671.64

The sale price of the set of dishes was ₱15,671.64.

QUESTIONS?