Republic of the Philippines

Department of Education
N a t i o n a l Ca pi t a l Re g i o n
Sc h o o l s D i v i s i o n O f f i c e o f La s Pi ñ a s Ci t y

NAME: ___________________________________________ Score: ___________________

GRADE & SECTION __________________________ Teacher: ___________________

BUSINESS MATH 11
Second Quarter
Week 5
MOST ESSENTIAL LEARNING COMPETENCY
Differentiate Mark-on, Markdown, and Mark up. (ABM_BM11BS-Ig-1)
Obtain Mark-on, Markdown, Mark up given price of a product. (ABM_BM11BS-Ih-2)

OBJECTIVES
 Define Mark-on, Markdown, and Mark up
 Illustrate Mark-on, Markdown, and Mark up

WHAT I KNOW

Determine the rate, base, and percentage in the following situations:

1. Dan borrows P20,000 for 2 years. The interest paid after a year is P1,000 at 5% annual interest.
2. In a shipment of 250 parts, 50 of the parts were defective which is 20% of the entire shipment.
3. John earned P500 interest from savings account paying 2% interest. He placed P25,000 in the account.
4. In a department store, Kim bought a pair of shoes at P1,800. He saw that the original price was P2,000 with a
10% discount.
5. Last week, the price of a jersey was P500. But after a week, the price increased by 10% with additional P50 to
the original price.

WHAT’S IN
The sum of the cost and mark up determines the selling price (S). Selling Price = Cost + Markup
S=C + M
The Markup can also be defined as the sum of the expenses (E) and profits (P). Markup = Expenses + Profits
M=E + P
Given all the formulas above, we can solve for the selling price as: Selling Price = Cost + Expenses + Profit
S=C + E + P
The formula for the rate of markup is based on cost denoted by Mc is given
byRLL:

and the formula for the rate of markup based on selling price denoted by Ms is given by

Example 1: A new pair of shoes costs P5,500. the rate of markup based on the selling price is 15%. What are the selling
price and the markup?
Solution: M = 0.15S S=C+M S = 5,500 + 0.15S 0.85S = 5,500 S = P6,470.59
To compute the markup, we have M = 0.15S = (0.15)(6,470.59) = P970.59
Markup can also be computed by: M = S - C = 6,470.89-5,500 = P970.59

WHAT’S NEW

The following formulas relate the selling price (S), original price (Po), and markdown rate (Md):
S = Po (1 - Md); ;

Example 2: After Christmas season, Sharon is considering to reduce the price of a gift wrapper. Her original price is P30.
a. if she wants to decrease its price to P21, what is the markdown rate?
b. suppose Sharon wishes to calculate the wrapper price based on the markdown rate of just 20%, how much
would her gift wrapper cost?
Solution:
a.

b. S = Po(1 - Md) = 30(1 - 0.2) = P24

WHAT’S IS IT
When the price of a retail product increases fairly soon after another increase is called mark-on.
Example 3: Manuel owns a flower shop in Dangwa. He knows that a lot of male customers will buy roses few days
before Valentine’s Day. The cost of a bouquet of roses is P80. A week before Valentine’s Day, the rare of mark up based
on the selling price of the bouquet is 10%. Manuel knew that even if he increases the selling price of bouquet of roses,
people will still buy it. So he decided to put a mark-on on 5% to its selling price.
 a. how much is the actual selling price?
b. how much is the mark up?
c. how much is the additional mark up?
d. how much is the new selling price after additional mark-on?
Solution:
a. Since M = 0.10S and S = C + M, we have S = 80 + 0.10S 0.9S = 80 S = P88.89
b. The mark up therefore is M = 0.10S = 0.10(88.89) = P8.89
c. The additional mark-on is given by Mc = 0.05S = 0.05(88.89) = P4.45
d. The new selling price is computed by: New selling price (NS) = S + Mo = 88.89 + 4.45 = P93.34

WHAT’S MORE
Some concepts to consider:

A reduction in the regular selling price of a particular product occurs in response to market conditions. It is called
markdown. The formula for the total cost is given by TC = C + E, where TC is the total cost, C is the cost, and E is the
expense. A break-even happens when a business has zero profit for a particular product. At break-even, the product’s
total cost is equal to its price. It means that the business does not make any profit or suffer from any loss.
Since S = C + E + P and TC = C + E, then the selling price S become S = TC + P. The profit or loss can be obtained by
getting the difference between the selling price and total cost.
P = S - TC. Note that when the value of P is negative, the selling price failed to cover the cost of buying the product, thus
the business suffers from loss.

Example 4: A sari-sari store sells a case of soft drink at P360. The store’s overhead expenses are 40% of cost and the
owner wants a profit that is 25% of the cost. a. how much is the cost of one case of soft drink? b. at what price must the
store sell the case to cover all costs and expenses? c. what is the highest rate of markdown so that the store will break-
even? d. find the rate of discount that can be offered without acquiring an absolute loss (that is, failure to get back the
cost of the commodity).
Solution: a. cost of one case of soft drink S = C + E + P → S = C + 0.4C + 0.25C → S = 1.65C
360 = 1.65CC → C =
b. price that will cover all the costs and expenses
Total cost: TC = C + E → TC = C + 0.4C → TC = 1.4C = 1.4(218.18) = P305.46
c.Maximum markdown to break-even: 360 - 305.46 = P54.54

d.Highest rate of discount: Maximum amount of discount: 360 - 218.18 = P141.82

WHAT I HAVE LEARNED

Mark up can be defined as the sum of the expenses (E) and profits (P). A markdown may be done
temporarily or permanently. A temporary markdown is a deduction in the selling price of an item to encourage
consumers to increase their demand on a particular product. On the other hand, permanent markdown is
implemented by companies to remove a “poor-sales” product from their inventory. In general, the purpose of
markdown is either to generate sales or to clear inventory. When the price of a retail product increases fairly soon
after another increase is called mark-on.

ASSESSMENT
Directions: Solve the following problems.
1. A sports center sells a pair of running shoes at mark up of 20% of the selling price. Their mark up on a specific
brand is P350.
a. How much is the cost of the running shoes?
b. What is its selling price?
c. What is the rate of mark up based on the cost?
2. David’s Bookstore foresees that people will buy notebooks several days before the start of a new school year. The
cost of the notebook in the store is P25. Two weeks before the start of the new school year, the store’s rate of mark
up based on the selling price is 8%. One week after the opening of classes, they decided to put an additional mark-on
of 2% to its selling price.
a. What is the selling price?
b. What is the mark up?
c. What is the additional mark-on?
d. How much is the new selling price after the additional mark-on?
3. A appliance store sells electric kettles at a mark up of 18% of the selling price. The store’s profit on a particular
model is P310.50
a. For how much does the store sell the kettles?
b. What was the cost of a kettle when it was brought by the store?
c. What is the rate of mark up based on the cost?
4. An optical shop sells a pair of contact lenses for P1,200. If they wish to lower its price to P900, what rate of
markdown should they offer?
Prepared by: Mary Ann E. Bermas, Las Pinas City National Senior High School – Doña Josefa Campus
 5. Jessica wants to sell banana cake she baked. She had a total expenses of P120, and 35% of it went to baking
expenses. How much should Jessica sell the cake with a goal or earning a profit of 30% of the cost?

Prepared by: Mary Ann E. Bermas, Las Pinas City National Senior High School – Doña Josefa Campus