CHAPTER 3:

BUYING
AND SELLING
LESSON 3.1 TRADE DISCOUNT
LEARNING OUTCOMES

In this lesson, the students will be able to:

 identify the original price, discount, and rate in a problem,
 compute single trade discounts, and
 solve problems on original price, discount, and rate.
INTRODUCTION:

A trade discount is the amount by which the retail price of the

product is reduced by the manufacturer when it is sold to the
reseller or costumer. Trade discount problems are percentage –
related problems. The formula used to solve for the trade discount
is given by 𝑡𝑟𝑎𝑑𝑒 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 = (𝑂𝑟𝑖𝑔𝑖𝑛𝑎𝑙 𝑃𝑟𝑖𝑐𝑒) × (𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑟𝑎𝑡𝑒).
 LET’S EXPLORE

Prince purchase 8 pairs of jag jeans at a discount of 25%, which are

listed at a price of ₱ 1 200 per piece. How much does each jag jeans
cost? How much will he save from buying 8 pairs of jeans?
It is ordinary to see discounts on price goods or commodities so that
business owners will increase their sales by encouraging costumers to
purchase in large quantities. It is one way to attract more people and
keep updated with price changes after list of goods have been printed.
 LET’S EXPLORE

Trade discount problems are percentage-related problems. We recall

the formula, 𝑃 = 𝐵 × 𝑅 where percentage P is the trade discount, the base
B is the original price of goods or commodity, and R is the discount rate.
Going back to the problem,
Original price: ₱ 1,200
Rate of discount: 25%
Trade discount: unknown
 LET’S EXPLORE

Trade Discount = (𝑜𝑟𝑖𝑔𝑖𝑛𝑎𝑙 𝑝𝑟𝑖𝑐𝑒) × (𝑟𝑎𝑡𝑒)

= (1 200) × (0.25)
= ₱ 300
The price for the pair of jeans = 𝑜𝑟𝑖𝑔𝑖𝑛𝑎𝑙 𝑝𝑟𝑖𝑐𝑒 – 𝑡𝑟𝑎𝑑𝑒 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡
= 1200 − 300
= ₱ 900
 LET’S EXPLORE

The total discount from buying 8 pairs of jeans is

(8) × (300) = ₱ 2,400
Prince, therefore, could save ₱ 2,400 from buying
8 pairs of jeans. 
 EXAMPLE 3.1.1

Jenny saved a total of ₱ 1,200 after a

15% discount was given to all her
purchases, how much was her total
purchase?
 EXAMPLE 3.1.1
•Solution:
 

Trade Discount: ₱ 1,200

Discount rate: 15%
Total purchase: unknown
𝑇𝑜𝑡𝑎𝑙 𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒 =
=
= ₱ 8 000
 EXAMPLE 3.1.2

A split type inverter air conditioner unit listed at

₱36 000 with a discount of ₱7 200 is offered to a
costumer. Determine the discount rate.
 EXAMPLE 3.1.2
•Solution:
 

Original Price: ₱ 36,000

Discount: ₱ 7,200
Discount rate: unknown
𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑟𝑎𝑡𝑒 =
=
= 0.2 × 100
= 20%
 EXAMPLE 3.1.3

Family Saver’s Supermarket places a ₱3,500

worth of order for assorted brands of chocolate. The
chocolate wholesaler gave a 25% discount. How
much is the trade discount?
 EXAMPLE 3.1.3
Solution:
Original price: ₱3,500
Discount rate: 25%
Trade discount: unknown
𝑇𝑟𝑎𝑑𝑒 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 = 𝑂𝑟𝑖𝑔𝑖𝑛𝑎𝑙 𝑝𝑟𝑖𝑐𝑒 × 𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑟𝑎𝑡𝑒
= 3 500 × 25%
= 3 500 × 0.25
= ₱875
 EXAMPLE 3.1.4

In a video store, a DVD that sells for ₱375 is

marked 10% off. What is the trade discount? What
is the sale price of the DVD?
 EXAMPLE 3.1.4
Solution:
Original price: ₱375
Discount rate: 10%
Trade discount: Unknown
𝑇𝑟𝑎𝑑𝑒 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 = 𝑂𝑟𝑖𝑔𝑖𝑛𝑎𝑙 𝑝𝑟𝑖𝑐𝑒 × 𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑟𝑎𝑡𝑒
= 375 × 10%
= 375 × 0.10
Trade discount = ₱ 37.50
 EXAMPLE 3.1.5

The 40% discount on a tennis racket amounts to

₱2,360.00
Compute:
a. the original price
b. the net prices
 EXAMPLE 3.1.5
•  
Solution:
a. Original price = = = ₱5,900
b. Net price = 𝑂𝑟𝑖𝑔𝑖𝑛𝑎𝑙 𝑝𝑟𝑖𝑐𝑒 − 𝐴𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡
= 5,900 – 2,360
= ₱3,540
LESSON 3.2 DISCOUNT SERIES
LEARNING OUTCOMES

In this lesson, the students will be able to:

determine the new cost of a product after giving series of
discounts,
compute for the equivalent single discount rate of discount series,
compute the saving from a single discount rate and saving from a
discount.
 INTRODUCTION:

Most boutique or shop in malls offer more than one discount in their
items. In addition to the basic trade discount offered to all customers,
the seller might also offer small discounts for large volume of purchase
and for early orders for seasonal items. A type of discount in which
several discounts are given to a customer at different times and
different conditions is called discount series. Discount series are given
to customers in order to encourage them to purchase volume. It is also
effective in promoting seasonal items and to entice new set of
customers.
 LET’S EXPLORE

Suppose two or more discounts are offered on the same

product, how do we solve its net price? Let us consider
the problem below.
An appliance store offers a refrigerator at ₱14,000 with
discount of 25% and 15%. How much does a
refrigerator cost?
 LET’S EXPLORE

To further attract buyers, two or more trade discounts are

offered on the same item.
 
Original price of refrigerator: ₱14,000
Discount rates: 25% and 15%
Cost of the refrigerator: unknown
 LET’S EXPLORE
Applying discount rates
We first apply the first discount rate to the original price and subtract the discount
obtained from the list price.
14 000 − 0.25(14 000) = ₱10,500
Then, we apply the second discount rate on the first discounted price and subtract
the discount obtained.
10 500 − 0.15(10 500) = ₱8,925
Therefore, the cost of the refrigerator given in a series of discounts 25% and 15% is ₱8,925.
 LET’S EXPLORE
Using the single discount rate (Equivalent of the Discount Rates)
We obtain the first the complements of percent rates and obtain their
respective decimal equivalents.
PERCENT GIVEN COMPLEMENT OF DECIMAL EQIUVALENT
PERCENT OF COMPLEMENT OF
PERCENT
25% 75% 0.75
15% 85% 0.85
 LET’S EXPLORE
Then, multiply the decimal obtained and subtract the result from 1. The result obtained
is the single discount rate equivalent (in decimal) of the given discount series.
(0.75) (0.85) = 0.6375
1 – 0.6375 = 0.3625
Lastly, multiply the original price by the single discount rate equivalent and subtract
the result from the original price.
0.3625(14 000) = ₱5,075
14 000 − 5 075 = ₱8,925
 LET’S EXPLORE

ILLUSTRATION:
Consider a discount series of 20%, 10%, and 5% At first, a
20% discount was given during the time of sale. Another 10%
discount is given to the customer, if he or she will buy a target
number of units. If payment is made in advance, the customer
will also receive a 5% discount.
 LET’S EXPLORE

ILLUSTRATION:
Consider a discount series of 20%, 10%, and 5% At first, a
20% discount was given during the time of sale. Another 10%
discount is given to the customer, if he or she will buy a target
number of units. If payment is made in advance, the customer
will also receive a 5% discount.
 EXAMPLE 3.2.1

In the given discount series 20%, 10%, and 5% given to

an item, answer the following:

a. Will it be the same as adding the discounts together,

and apply a 35% single trade discount?
 EXAMPLE 3.2.1

Answer:
No, because each time we apply an additional discount, our base becomes
smaller. Applying a 35% discount directly to the original price would result in
a different net price.

For example, the selling price of a split-type air-conditioner listed is ₱20 000.
After giving a 35% discount, the new selling price will be
20 000 − 0.35(20 000) = ₱13 000
 
 EXAMPLE 3.2.1
However, giving a discount series of 20%, 10%, and 5%, we compute the
selling price as follows,

20 000 – 0.20(20 000) = ₱ 16,000

16 000 – 0.10(16 000) = ₱ 14,400
14 400 – 0.05(14 400) = ₱ 13,680

 b. How can we obtain an equivalent one-time discount rate for the series
of discounts of 20%, 10%, and 5%?
 EXAMPLE 3.2.1
Solution:
We compute first the complement of percent.
The complement of percent is the difference between 100% and
the given percent.
PERCENT GIVEN COMPLEMENT OF PERCENT DECIMAL EQIUVALENT OF
COMPLEMENT OF PERCENT

20% 80% 0.80

10% 90% 0.90
5% 95% 0.95
 EXAMPLE 3.2.1

We multiply the decimal equivalent of the

complement of percent, 0.80(0.90) (0.95) = 0.684 =
68.4% Since 100% − 68.4% = 31.6%, the series of
discount 20%, 10% and 5% is equivalent to 31.6%
 EXAMPLE 3.2.2

A cellphone brand is subject to a series of

discount of 15%, 10%, and 5%. If the net price
is ₱5 000, what is the estimated list price of the
cellphone?
 EXAMPLE 3.2.2
•Solution:
 
Multiplying the complement of percent (discount rates) and the original price of the item will result
to the net price. Thus, we will be arrived at a formulated equation as
 
Net Price = (1 − ) (1 − ) (1 − ) (𝑜𝑟𝑖𝑔𝑖𝑛𝑎𝑙 𝑝𝑟𝑖𝑐𝑒)
5 000 = (1 − 0.15) (1 − 0.10) (1 − 0.05) (𝑜𝑟𝑖𝑔𝑖𝑛𝑎𝑙 𝑝𝑟𝑖𝑐𝑒)
5 000 = (0.85) (0.90) (0.95) (𝑜𝑟𝑖𝑔𝑖𝑛𝑎𝑙 𝑝𝑟𝑖𝑐𝑒)
5 000 = (0.72675) (𝑜𝑟𝑖𝑔𝑖𝑛𝑎𝑙 𝑝𝑟𝑖𝑐𝑒)
₱6,879.94 = 𝑜𝑟𝑖𝑔𝑖𝑛𝑎𝑙 𝑝𝑟𝑖𝑐e
 
The estimated list price of the cellphone brand is ₱6,900.
LESSON 3.3 PROFIT
AND LOSS
LEARNING OUTCOME:

In this lesson, the students will be able to:

solve for the profit given the cost and net
sales and
determine if the profit or loss is achieved in
a given transaction.
INTRODUCTION

The difference between what merchant invests into

business and what he receives in return is called profit. To
compute for profit, we use

P𝑟𝑜𝑓𝑖𝑡 = N𝑒𝑡 S𝑎𝑙𝑒𝑠 − C𝑜𝑠𝑡

Where Net Sales are the amount of money receive from

selling goods, and Cost is the amount paid for the goods.
INTRODUCTION

However, there are cases in which the Net Sales of good is

less than its cost; such difference is called loss. We can
express loss mathematically as

𝐿𝑜𝑠𝑠 = 𝐶𝑜𝑠𝑡 − 𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠

In the case when Net Sales equal to Cost, we call such

situation as break-even.
 
LET’S EXPLORE

Rodrigo is engaged in a buy-and-sell business of

perfumes. He bought 10 boxes of perfumes. Each
box costs ₱12,000 and contains a dozen of perfume
bottles. He is planning to sell one perfume bottle at
₱1,500. What is he expected profit on the 10 boxes
of perfumes?
 
LET’S EXPLORE

The ultimate goal of business whether retail or

wholesale is to earn a profit. Getting the difference
between the amount of money earned from selling
10 boxes containing a dozen of perfume bottles and
the cost of those 10 boxes gives the profit.
LET’S EXPLORE

Given: 10 boxes of perfumes containing a

dozen of bottles →120 bottles bought by
Rodrigo
Cost of each box = ₱12,000
Selling Price of each perfume = ₱1,500
 
LET’S EXPLORE

REQUIRED: PROFIT
To solve the problem, we compute first the cost of
10 × 12 = 120 𝑏𝑜𝑡𝑡𝑙𝑒𝑠.
Since each box cost ₱12,000 and Rodrigo bought 10
boxes,
Cost = 12 000(10) = ₱120,000
 
LET’S EXPLORE

Rodrigo can expect that the net sales he will get

upon selling 10 boxes consisting of 120 bottles are,
Net sales = 1 500(120) = ₱180,000.
Thus, he has
Profit = 𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 − 𝐶𝑜𝑠𝑡
= 180 000 − 120 000
= ₱60,000
EXAMPLE 3.3.1

A watch store owner decided to offer a 20% discount

for a particular brand of watch which sells at
₱35,000. By doing so, his average sales increased
from 5 watches to 12 watches a day. If he bought
one watch at a price of ₱22,000 from the supplier, by
how much was the daily profit increased or
decreased by offering such discount on the watch?
EXAMPLE 3.3.1

Solution:
We compute for the daily profit before and after the
discount was offered
Without discount,
Profit per watch = 35 000 − 22 000 = ₱13 000
Profit for selling 5 watches = 13 000(5) = ₱65,000

 
EXAMPLE 3.3.1

With 20% discount,

New selling price = 35 000 − 0.2(35 000) = ₱28,000
Profit per watch = 28 000 − 22 000 = ₱6,000
Profit for 12 watches = 6 000(12) = ₱72 000
Increase in daily profit = 72 000 − 65 000 = ₱7,000

 
EXAMPLE 3.3.2

Annie bought one dozen of smartphones for

₱200,000 with a discount of 5%. Half dozen was
sold at a price of ₱18,000 per unit. However, a new
model of smartphone became available in the
market, so she sold the remaining half dozen at
₱12,000 each unit. What was her profit or loss?
EXAMPLE 3.3.2
Solution:
Cost of 12 dozen of smartphones = 200 000 − 0.5(200 000) =
₱190,000
Net Sales:
For 6 smartphones at a price of ₱18,000 per piece = ₱108,000
For 6 remaining phones at a price of ₱12,000 per piece = ₱72,000
Total Net Sales = ₱180,000
Loss = 𝐶𝑜𝑠𝑡 − 𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 = 190 000 − 180 000 = ₱10,000
EXAMPLE 3.3.3

Jay-R bought two digital cameras at ₱15,490 each. He

sold one of the cameras to his friend at ₱13,500, while the
other one was sold to his neighbor at ₱16,200. How much
is Jay-R's profit or loss?
 
EXAMPLE 3.3.3

Solution:
Cost of 2 digital cameras = (15 490)(2) − ₱30,980
Net Sales = 13 500 + 16 200 − ₱29,700

Loss = 𝐶𝑜𝑠𝑡 − 𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠

= 30 980 − 29 700
= ₱1,280
 
EXAMPLE 3.3.4

Michelle went to Baguio and bought 20 jars of

strawberry jam for ₱3,500 with 15% discount.
When she got back to Manila, she sold 10 of
the jams for a total of ₱1,800, and the rest at
P185 each. How much profit did Michelle gain?
 
EXAMPLE 3.3.4
Solution:
Cost of the 20 jars of strawberry jam = ₱3,500 − ₱3, 500(0.15) =
₱2,975
Net Sales:
First 10 jars = ₱1,800
Remaining 10 jars = ₱1,850
Total Net Sales = ₱3,650
Profit = 𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 – 𝐶𝑜𝑠𝑡
= 3 650 − 2 975
= ₱675
 
LESSON 3.4 MARKUP AND
MARKDOWN
LEARNING OUTCOME
In this lesson, the students will be able to:
differentiate markup and markdown,
solve problems related to markup and markdown, and
obtain the selling price after a markup or markdown.
INTRODUCTION:
To cover the expenses or overhead of running the
business, a markup (M) is put on products.
The sum of the cost (C) and markup determines the
selling price (S).

Selling Price = 𝑐𝑜𝑠𝑡 + 𝑚𝑎𝑟𝑘𝑢𝑝

𝑆=𝐶+𝑀
INTRODUCTION:
Markup can also be defined as the sum of
the expenses (E) and profits (P).

𝑀𝑎𝑟𝑘𝑢𝑝 = 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠 + 𝑃𝑟𝑜𝑓𝑖𝑡𝑠

𝑀=𝐸+𝑃
INTRODUCTION:
Given all the formulas above, we can solve for
the selling price as:

𝑆𝑒𝑙𝑙𝑖𝑛𝑔 𝑃𝑟𝑖𝑐𝑒 = 𝐶𝑜𝑠𝑡 + 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠 + 𝑃𝑟𝑜𝑓𝑖𝑡

𝑆=𝐶+𝐸+P
LET’S EXPLORE
A clothing line company purchases cotton at a cost
of ₱60 per meter. 30% of the cost goes to their
operating expenses, and the goal of the business is
to earn a profit that 25% of the cost. How much is
the company’s markup on the cotton? How much is
the selling price of the cotton?
LET’S EXPLORE
In the problem, we have
Cost per meter of cotton: ₱60
Operating Expenses: 30% of the Cost
Profit: 25% of the Cost
Adding the expenses and profits from a business result in a
markup.
So, the markup may be computed as follows,
Markup = 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠 + 𝑃𝑟𝑜𝑓𝑖𝑡𝑠
= (0.3)(60) + (0.25)(60)
= ₱33
LET’S EXPLORE
The company may sell the product by adding the
cost and the markup.
𝑆𝑒𝑙𝑙𝑖𝑛𝑔 𝑃𝑟𝑖𝑐𝑒 = 𝐶𝑜𝑠𝑡 + 𝑀𝑎𝑟𝑘𝑢𝑝
= 60 + 33
= ₱93 𝑝𝑒𝑟 𝑚𝑒𝑡𝑒𝑟
LET’S EXPLORE
Suppose we want to compute for the rate of
markup, we can either base the rate of markup on
the cost or on the selling price.
When markup is expressed as a percentage of the
cost or selling price, we call it the rate of markup.
LET’S EXPLORE
 
The formula for the rate of markup is based on
the cost denoted by is given by:
 
(%) = (100) = (100)
LET’S EXPLORE
 
and the formula for the rate of markup based
on the selling price denoted by is given by,
 
(%) = (100) = (100)
EXAMPLE 3.4.1

The cost of a new pair of sunglasses is

₱4,500. The selling price is ₱8,000.
What is the rate of markup based on
cost?
EXAMPLE 3.4.1
 
Solution:
Since 𝑆 = 𝐶 + 𝑀, then
𝑀=𝑆−𝐶
= 8 000 − 4 500
= ₱3,500
Computing for the rate of markup based on cost,
(%) = (100) = (100) = 0.7778(100) = 77.78%
EXAMPLE 3.4.2

A new pair of shoes costs ₱5,500. The

rate of markup based on the selling
price is 15%. What is the selling price
and markup?
EXAMPLE 3.4.2
Solution:
Since M = 0.15(𝑆), 𝑤𝑒 𝑔𝑒𝑡
𝑆=𝐶+𝑀
𝑆 = 5,500 + 0.15𝑆
0.85𝑆 = 5 500
𝑆 ≈ ₱6 470.59
EXAMPLE 3.4.2
Solution:
To compute the markup,
𝑀 = 0.15(𝑆) = (0.15)(6 470.59) = ₱970.59

Markup can also be computed by

𝑀 = 𝑆 − 𝐶 = 6 470.59 − 5 500 = ₱970.59
 Business Owners reduce the price of their
products to match competitor’s price
adjustments. However, imposing a markdown
may result into zero profit. To compute for the
highest rate of markdown, we solve for the
following elements first: the cost of one unit
of commodity and the price that will cover all
the costs and expenses.
1. A reduction in the regular selling price of a
particular product occurs in response to market
conditions. It is called a markdown.
2. 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
3. A breakeven happens when a business has zero
profit for a particular product.
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 = 𝑡 𝐸, then the
selling price S become 𝑆 = 𝑇𝐶 + 𝑃
4. 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 3.4.3
A sari-sari store sells a soft drinks case at ₱360. 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 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).
 EXAMPLE 3.4.3
 
Solution:
a. Cost of one soft drink case
𝑆=𝐶+𝐸+𝑃
= 𝐶 + 0.4𝐶 + 25𝐶
𝑆 = 1.65𝐶
360 = 1.65𝐶
𝐶 = ≈ ₱218.18
EXAMPLE 3.4.3
Solution:
b. Price that will cover all the costs and expenses.
Total cost 𝑇𝐶 = 𝐶 + 𝐸
= 𝐶 + 0.4𝐶
= 1.4𝐶
= 1.4(218.18) = ₱305.46
 EXAMPLE 3.4.3
 
Solution:

c. Maximum Markdown to break even: 360 − 305.46 = ₱54.54

Rate of Markdown = = = 0.1515 = 15.15%
 EXAMPLE 3.4.3
 
Solution:

Lowest Price:
For the maximum amount of discount which is 360 − 218.18 = ₱141.82
Rate Discount = = = 0.3939 = 39.39%
EXAMPLE 3.4.4

Find the markdown rate if the DVD

was originally priced at ₱290.00 and
it was sold at ₱240.00.
EXAMPLE 3.4.4
Solution:
a. Solving for the markdown
Markdown = 𝑜𝑟𝑖𝑔𝑖𝑛𝑎𝑙 𝑝𝑟𝑖𝑐𝑒 − 𝑠𝑒𝑙𝑙𝑖𝑛𝑔 𝑝𝑟𝑖𝑐𝑒
Markdown = 290.00 − 240.00
Markdown = ₱250.00
 EXAMPLE 3.4.4
 
Solution:
b. Solving for the rate of markdown
Rate of Markdown = = = 0.208333 = 21%
 
The rate of markdown is 21%