Markup and Markdown: Mr. Christian Rae D. Bernales, LPT

Markup and Markdown
Prepared By:
Mr. Christian Rae D. Bernales, LPT

I. Learning Objectives:
At the end of the lesson the learner should be able to;
1) Differentiate Mark-on, Markdown and Markup.
(ABM_BM11BS-Ig-1)
2) Illustrate how Mark-on, Markdown, and Markup are obtained.
(ABM_BM11BS-Ih-2)
3) Differentiate markup from margins. (ABM_BM11BS-Ih-3)
4) Describe how gross margins is used in sales. (ABM_BM11BS-Ih-4)
II. Development of the Lesson:
is the amount at which the

product is to be sold.
is the total cost involved in selling a

product. This involves purchase price (fixed cost) and all other
expenses (variable cost) that are incurred before a product is sold.
Retrieve from: https://marketbusinessnews.com/financial-glossary/selling-price/

III. Lesson Proper
is the difference between the selling price and the cost price.
It is computed based on the mark-up percentage.
Basic Formula:
Markup amount = Selling Price – Cost Price
Markup amount = Markup percentage × Cost Price
Markup Percentage is the percentage of the cost price that the company
wanted to add to determine the selling price
𝑀𝑎𝑟𝑘𝑢𝑝 𝑎𝑚𝑜𝑢𝑛𝑡
Markup Percentage = 100 × ( )
𝐶𝑜𝑠𝑡 𝑝𝑟𝑖𝑐𝑒
Example:
How much must be the selling price of a monoblock table with a cost price
of Php 525.00 if the desired markup percentage is 28%.
Solution:
C = Php 525.00 MuA = Mu% x C
Mu% = 28% MuA = (0.28) x (525)
SP = ? Markup Amount = Php 147.00
SP = MuA + C
SP = 147 + 525
Selling Price = Php 672.00
1.) How much was the cost price of a bag pack sold for Php 381.90
if the markup percentage is 34%?
is a temporary mark-up on certain products to take
advantage of the high demad during peak sales like the weeks prior to
Christmas, opening of classes, etc. Mark-on is used to temporarily
maximized earnings and the price is usually returned to its original selling
price when the demand for the product is on a normal level.
Basic Formula:
Mark-on amount = New SP – Current Selling Price
Mark-on amount = Mark-on percentage × Current SP
Example:
A fast-selling item in a Department Store is currently being sold for
Php 675.35. Because of high demand for the item, the store decided to
apply a mark-on percentage of 22%. Find the new selling price.
Solution:
Current Selling Price = Php 675.35
Mark-on Percentage = 22%
MoA = Mo% x CSP

MoA = (0.22) x (675.35)
Mark-on Amount = Php 148.58
NSP = MoA + CSP

NSP = 148.58 + 675.35
New Selling Price = Php 823.93
1.) An electronics retailer offers a computer with a current selling

price of Php 1,000. The retailer applies a mark-on percentage of
20%. Find the new selling price?
is defined as a reduction in the selling price of the
merchandise. The cause of a Markdown may be to stimulate the sale of
slow-moving products. Some may use mark-down to drive competitors out
of business.
Basic Formula:
Markdown amount = Current SP – New Selling Price
Markdown amount = Markdown percentage × Current SP
Example:
How much markdown percentage was applied to a jacket whose previous
price of Php 798.00 is now sold for Php 654.36?
Solution:
Current Selling Price = Php 798.00
New Selling Price = Php 654.36
MdA = CSP – NSP

MdA = 798 – 654.36
Markdown Amount = Php 143.64
𝑀𝑑𝐴
Md% =
𝐶𝑆𝑃
143.64
Md% =
798
Markdown Percentage = 0.18 x 100 = 18%
1.) Find the previous selling price of a shirt which now sells at
Php 219.00 which was given a markdown percentage of 27%.
is defined as the difference between the selling price and the
cost price. Gross Margin or Profit Margin is numerically equal to the mark-
up. Gross margin is based on the selling price of the product rather than its
cost price.
The Illustration below shows the computation of the Margin and Markup.
Example:
Compare the markup percentage and gross
margin of a rubber shoes with a cost price
of Php 1,765.00 and a selling price of
Php 2,153.33.
Solution:
Markup Percentage Gross Margin
First find the markup amount. Markup Amount = Php 388.33
MuA = SP – CP Selling Price = 2,153.33
MuA = 2,153.33 – 1,765
Markup Amount = Php 388.33 Find the margin percentage.
Mar% = MuA ÷ SP
Next find the markup percentage. Mar% = (388.33 ÷ 2,153.33) × 100
Mu% = MuA ÷ CP Gross Margin = 18.03%
Mu% = (388.33 ÷ 1,765) × 100
Markup percentage = 22%
Solve the problem involving Gross Margin.
1.) Sally sold a computer for Php 219,540.00. The cost of the item was
Php 147,470. What was the Gross Margin, Markup amount, and the
Markup percentage?
1.)
2.)
3.)
Reference: https://www.youtube.com/watch?v=n6qz7fiyM6w
https://www.youtube.com/watch?v=rD-l7kO4-F4

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Markup and Markdown

Mr. Christian Rae D. Bernales, LPT

II. Development of the Lesson:

is the amount at which the

is the total cost involved in selling a

Retrieve from: https://marketbusinessnews.com/financial-glossary/selling-price/

MoA = Mo% x CSP

NSP = MoA + CSP

1.) An electronics retailer offers a computer with a current selling

MdA = CSP – NSP

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