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    Business Math Reviewer

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    Buying and selling price

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    Business Math Reviewer

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    9 views4 pages
    Buying and selling price

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    business math reviewer

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    Buying and selling price

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    9 views4 pages

    Business Math Reviewer

    Uploaded by

    student
    Buying and selling price

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 4

    Buying and selling

    COST PRICE VS SELLING PRICE


    ▸ Cost Price is the price a retailer/merchandising ▸ Selling Price (or Retail Price) is the price for
    business is paying to buy/purchase a product. which the retailer/merchandising business is
    selling a product to a customer.

    MARKUP
    -is the difference between a selling/retail price and a cost price.
    -Markup is added to cost to cover the operating expenses and provide a profit to the retailer.
    MARKUP = Retail Price - Cost Price

    MARKDOWN
    -is the reduction of the original selling/retail price.
    -The reduction might be brought by a discount, damaged product, near expiring products or old
    stocks.
    MARKDOWN = Original Retail Price - New Retail Price

    ▸ TRADE DISCOUNT
    -is a type of markdown which pertains to the reduction of list price.
    -it is usually offered between a manufacturing and a wholesaler or between a wholesaler and a
    retailer.
    Trade Discount = List Price x Trade Discount Rate
    Net Price = List Price - Trade Discount
    Trade Discount Rate = Trade Discount ÷ List Price

    CASH DISCOUNT
    -is a type of markdown which pertains to an incentive given by a retailer to a buyer for paying a bill
    before the scheduled due date.
    -The seller generally reduce the amount due by a small amount of percentage or a set of a peso
    amount.
    Cash Discount = Invoice Amount x Cash Discount Rate
    Net Amount = Invoice Amount - Cash Discount
    Cash Discount Rate = Invoice Amount ÷ Cash Discount

    Profit or Loss
    -Not all businesses make money. A business incurs operating expenses (OE) such as rents, lighting,
    wages, rents, commissions, bonus and other operating expenses.
    -The markup must be able to cover the operating expenses.
    -If markup is greater than operating expenses, then net profit is achieved.
    -If markup is less than operating expenses, then net loss is incurred.
    -If the retail price just covers the cost price and the operating expenses, then it does not
    make any profit nor incur any loss. This is called breakeven price.
    Breakeven price = Cost Price + Operating Expenses
    Bp = CP + OE

    -The markup equation can now be expressed as follows:


    Retail price = Cost + Operating expenses + Net profit
    RP = CP + OE + NP
    a. operating expense = ?
    Given : CP = 6,400
    Solution : OE = 20% of CP
    = 0.20 x 6,400
    OE= 1,280

    b. the breakeven price = ?


    Given :CP = 6,400 OE = 20% of CP = 0.20 x 6,400 = 1,280
    Solution : BP = CP + OE
    BP = 6,400 + 1,280
    BP = 7,680

    c. net profit = ? d. the retail price = ? e. the gross profit (Markup) = ?


    Given : CP = 6,400 Given : CP = 6,400 ,OE = Given:CP = 6,400 ,RP =
    Solution : NP = 25% of CP 1,280 , NP = 1,600 9,280
    = 0.25 x 6,400 Solution: RP = CP + OE + NP Solution: GP= RP - CP
    NP= 1,600 RP = 6,400 + 1,280 + 1,600 = 9,280 - 6,400
    RP = 9,280 GP = 2,880

    COMMISSIONS

    Commission
    -is a payment based on the percentage of sales of an agent.
    -Will help the employer and employees to have a harmonious relationship within the company. This
    will serve as a reward for the employees who will make a sale. It can also be a driving force for the
    employee to do their job efficiently and effectively.
    Formula for the Commission
    Commission rate x Total amount sale of the month

    Formula for the gross pay for the Month


    Commission + Basic salary.

    Steps in computing for the Commission.


    1. Analyse the problem carefully.
    2. Jot down all the given.
    3. Write the indicated formula.
    4. Substitute the given to the formula.
    5. Perform the operations needed.

    Different types of Commission.


    1. Straight Commission
    - Is a form of compensation, but with no fixed salary of the agent. It means that it is only the
    Commission of sales that the agent will get from the company.

    EXAMPLE 1: Danielle works in a company with a Commission only basis. His boss gave him a 3.2%
    Commission on his total monthly sales without a base salary. Fortunately, Danielle made a sale of
    180,000 pesos for the month of July. How much will be his Commission?
    Solution: Commission rate= 3.2% OR 0.032
    Wholesale = Php 180,000
    Formula: Commission rate x Total mount Sale of the month.
    =0.032 x 180,000
    =Php 5,760

    2. Graduated Commission.
    -is a type of Commission that the company gives to their sales agent not in once but in gradual. The
    Commission will increase if the sale of an agent also increases. This will encourage the agent to sell
    more so that they can earn a big Commission.

    EXAMPLE: Rolando is an agent with a commission of 3% on his first Php 150,000 Of sales during
    the month and 2.5% commission on sales above Php 150,000. He happened to have a sale of Php
    187,000. How much will he earn?

    Solution: To compute for his commission,


    Php 150,000 x 3% or 0.03 = Php 4,500
    Php 187, 000 - Php 150, 000= Php 37, 000
    Php 37, 000 x 2.5% or 0.025 = Php 925

    Php 4, 500 + Php 925 = Php 5, 425

    3. Salary plus Commission.


    -is when an agent gets a salary on top of the Commission, he or she will get for every sale that he or
    she can make.

    EXAMPLE : Mr. Chan is working in a company with a minimum salary of 12,000 pesos monthly. On
    top of his salary, he is expected to sell appliances where Php 6000. He can get an additional 3%
    Commission when he exceeds his expected sales. He fortunately made a sale worth Php13,700.
    How much will be his gross pay?

    Solution: To compute for his commission,


    Php 1700 - Php 6000 = Php 7700 x 0.03 = php 231

    then compute now the gross pay.


    =Commission + monthly salary.
    =Php 231 + Php 12000 = Php 12,231.

    EXAMPLE (Commission on installment basis.): Mr. Watson works in a cell phone shop that offers him 3%
    Commission on every sale he can make. He made a sale worth Php 80,000 that can be paid in an
    installment of 10,000 per month for 8 months. How much will be his monthly Commission? How much is the
    total Commission he can get?

    Solution: Commission rate= 3% OR 0.03


    Monthly Payment = Php 10,000

    Formula: Commission rate x Payment.


    =0.03 x 10,000
    =Php 300 is his monthly Commission.

    =Php 300 x 8 months


    = Php 2,100 is his total commission

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