Lesson 3.

Profit and Loss

Business Mathematics
Accountancy, Business, and Management

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What are
your
greatest
what ifs?
2
 Cash Discounts
Cash discounts are special deductions from the net price
to encourage buyers to pay promptly.

CD = (NP)(RC)
CD = cash discount
NP = net price
RC = rate of cash discount

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 Cash Discounts

Terms of Cash Discounts

2/10, n/30 (Two ten, n thirty)

A cash discount of 2% is given for

payment within ten days from the date
of invoice, and the net amount is due 30
days from the date of invoice. 13
 Cash Discounts

Terms of Cash Discounts

3/10, 2/15, n/60 (Three ten, two fifteen, n
sixty)

A cash discount of 3% is given for payment

within ten days from the date of invoice or a
cash discount of 2% is given for payment
within 15 days from the date of invoice, or the 14
 Cash Discount

1. On November 15, 2021, you Closer

Look

paid an invoice of ₱12,500 net

price which shows the terms
3/10, 2/30, n/60 with an invoice
date of October 30, 2021. How
much did you actually pay?
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 Cash Discount

2. An invoice dated December Closer

Look

11, 2021 shows the terms

2/10, n/30. When will be the
last day of cash discount and
the last day before
implementing late charges.
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 Challenge Yourself
Answer the following questions.

1. A company received an invoice for a copying machine

amounting to ₱42,150.00 dated September 13, 2021
with the terms 5/10, 2/30, n/60.
a. Compute the total amount paid if it was paid on
October 31, 2021.
b. Compute the total amount paid if it was paid on
October 14, 2021.
c. Do you think there’s a difference between the
amount of payment if it was paid on October 14 or
31, 2021?

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 Check Your Progress

An invoice dated March 15, 2021 shows the terms 3/5,

3 2/10, n/eom. When will be the last day of cash discount
and the last day before implementing late charges.

Answer area

18
Lesson 3.3

Profit and Loss

Business Mathematics
Accountancy, Business, and Management

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Profitability is
one of the
primary
reasons for the
establishment
of enterprises.

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Every person
doing business
aims to earn
from the
products they
sell or the
services they
provide.

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To increase their profit, companies increase their sales
and reduce their cost.
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 Profit or Loss

● whether total sales

are enough to
cover all payables
and other expenses

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 Profit or Loss

Profit Loss

● when an amount is left ● when there is not

after costs and enough money to cover
expenses are deducted all expenses incurred
● revenue > costs
● revenue < cost

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 How to Compute Profit

where;
R>C
P = Profit
R = Revenue
C = Cost

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 How to Compute Profit

When the profit is known, we can also compute for the

profit percentage.
P% = P x 100%
R

where;
P% = Profit Percentage
P = Profit
R = Revenue
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 Example 1

Closer
Look

Melody’s gross revenue is ₱5,650.00, while her total cost

is ₱3,125.00. Thus, her profit must be ________________.

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 Example 2

Closer
Look

A small sari-sari store earned a total of ₱7,124.00 last

month. On the other hand, its expenses included
₱3,145.00 for the products and ₱1,100.00 for
electricity. How much was its profit? What is the profit
percentage?

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 How to Compute Loss

where;
C>R
L = Loss
C = Cost
R = Revenue

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 How to Compute Loss

If the loss is known, we can also compute for the loss

percentage.
L% = L x 100%
R

where;
L% = Loss Percentage
L = Loss
C = Cost
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 Example 1

Closer
Look

How much is the loss if a 50-kg sack of rice purchased

for ₱2,500 is sold for ₱42 per kilo?

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 Check Your Progress
Greg purchased a laptop for ₱28,000 and spent an
additional ₱2,500 on extra parts for it. He
1 eventually sold it for ₱35,000 to a friend. Did he
earn a profit? How much?
Answer area

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 Check Your Progress

Due to oversupply, Danny was forced to sell his

2 50-piece box of facemasks for ₱5 each, which he
bought for ₱400. How much did he lose?

Answer area

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 Problems Involving Profit and Loss

Profit Loss

● can lead to business ● can cease the operation

growth of a business

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 Example 1

Closer
Look

Pia is the owner of a tiny pastry shop that sells

cupcakes. She was able to sell 1,012 cupcakes for
₱45.00 a piece last month. She must spend ₱33.00 on
the ingredients to make one cupcake. Apart from the
cost of products purchased, Pia must also pay rent and
electricity, with a total of ₱4,000.00 and ₱2,300.00,
respectively. How much is her profit or loss?

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 Example 2

Closer
Look

A cameraman purchased two digital cameras for a

total of ₱30,980. He sold one of the cameras for
₱13,500 to a friend and the other for ₱16,200 to a
neighbor. Did he earn a profit, or did he lose?

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 Example 3

Closer
Look

George is interested in starting a pop-up store

business. He plans to sell personalized shirts. Each
shirt will cost him Php 350.00 for the materials, and it
will be sold for Php 450.00. If he needs Php 3,500.00
for other expenses, will a total of 30 shirts ​be enough
to cover the cost? Show your answer.

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 Check Your Progress

Your friend gave you ₱80 for a pen that you got for
1 ₱50. You then buy a bat from him for ₱800. Later
you find out that the bat was worth ₱750. Did you
lose money, or did you make a profit? How much
did you earn or lose?
Answer area

38
 Check Your Progress

Quennie, a phone enthusiast, bought two different

2 brands of phones for the same price. When newer
models arrived, she sold both phones for ₱13,500
and ₱18,500, respectively. How much is Quennie’s
profit or loss if she bought the phones for ₱15,800
each?
Answer area

39
 Challenge Yourself
Answer the following problems:
2. A woman is having difficulty figuring out which will
give more profit in terms of profit percentage: selling a
50-piece box of facemask purchased for ₱150 and sold
for ₱5 per piece or a 10-liter gallon of disinfectant
worth ₱500 and is sold for ₱71 per liter. Help her
decide.
Answer area

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 Mark-Up

● the added amount to the cost to determine the selling

price
● the sum of the additional expenses and the profit
● can either be mark-on or margin.
S = C + Mup

S = Selling Price
C = Cost
Mup = Mark-up [Mark-on(Mo) or Margin(Mm)]
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 Mark-Up

Mark-On
● computed mark-up based on cost:
Mo = (Rmo)(C)

Mo = mark-on or mark-up based on cost

Rmo = mark-on rate (in decimal)
C = cost

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 Mark-Up and Mark-On

Closer
Look

1.Your online store bought 100 pajama

sets at a wholesale price of ₱12,000.00.
If there will be a 40% mark-on, what is
the selling price of each pajama set?

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 Mark-Up and Mark-On

Closer
Look

2. You sell shower curtains at ₱300.00

each. If the cost of each shower curtain is
₱250.00, what is the rate of mark-up based
on the cost?

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 Mark-Up

Margin
● computed mark-up based on the selling price:
Mm = (Rmo)(S)

Mm = margin or mark-up based on the selling price

Rmm = margin rate (in decimal)
S = selling price

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 Mark-Up and Margin

Closer
Look

1. You sell generic smart phones for

₱4000.00 each. Determine its cost if
its margin is 45%.

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 Mark-Up and Margin

Closer
Look

2. You sell pre-loved LCD monitors for

₱2,500.00 each. Determine the rate
of its mark-up based on the selling
price if you bought each monitor for
₱1,500.00 each.

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 Check Your Progress
A concentrated mango syrup is sold with a mark-up of
45% of the selling price. Each liter costs ₱18.00.
1 Compute the (a) selling price per liter and the (b) rate
of mark-up based on cost.
Answer area

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 Mark-Down

● the difference between the old selling price and the new
selling price
● computed by multiplying the old selling price by the
rate of the mark-down
Md = So - Sn
Md = Mark-down
Md = (Rmd)(So)
So = Old selling price
Sn = New selling price
Rmd = Mark-down rate (in decimal)
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 Mark-Down

Closer
Look

1. A brand new electric skateboard is

originally priced at ₱6,500.00. It has been
sold for ₱4,550.00. Compute for its mark-
down and mark-down rate.

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 Mark-Down

Closer
Look

2. A computer set originally priced at

₱28,700.00 will have its price lowered at
35% mark-down. Compute its new selling
price.

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 Check Your Progress
A movie ticket is priced at ₱220.00 each. Suppose you
will buy the ticket at least 3 days before the screening
2 day. It will be sold at ₱180.00 each. Compute for the
offered mark-down rate.
Answer area

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 Problems Involving the Mathematics of
Selling
● Price: among the mix
of factors that affect a
business’s
relationship with
customers
○ crucial in
attracting and
retaining
customers
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Problems Involving the Mathematics of
Selling
● pricing decisions consider
the cost, profit,
customers, and
competition
● “mathematics of
selling”
○ mark-up
■ mark on
■ margin
○ mark-down 54
 Problems Involving the Mathematics of Selling

Closer
Look

1. You are selling an item for ₱800.00.

Determine its cost if its mark-up is:
a. 25% of the cost
b. 35% of the selling price.

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 Problems Involving the Mathematics of Selling

Closer
Look

2. You want to buy sunglasses worth

₱2,300.00. If it will be sold at a lower
price of ₱1,035.00, compute the
mark-down rate.

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 Problems Involving the Mathematics of Selling

Closer
Look
Step 2: Identify the given in the problem.
The old selling price (So) and the new selling price
(Sn) are given.
So = ₱2,300.00
Sn = ₱1,035.00

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 Problems Involving the Mathematics of Selling

Closer
Look
Step 3: Write the working equations.
Md = Mark-down amount
Md = So - Sn
Md = (Rmd)(So)

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 Problems Involving the Mathematics of Selling

Closer
Look
Step 4: Substitute the given values.
Md = So - Sn = 2,300 - 1,035 = ₱1,265

Step 5: Find the answer.

Rmd(%) = 55%
The rate of mark-down is 55%.

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Keep in Mind

60
 Challenge Yourself
Answer the following questions.

1. You bought bags at ₱200.00 each for your online store.

Compute its (a) selling price after implementing a
margin rate of 80% and the (b) rate of mark-on.

Answer area

61
 Challenge Yourself
Answer the following questions.
2. A ride-all-you-can ticket at a theme park costs ₱980.00
each on weekends and has a mark-down rate of 25%
on weekdays. Compute your total savings if you will
buy 3 tickets during weekdays.
Answer area

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 Break-Even

Profit is an important factor in business. Recall from

previous lessons that profit is gained when total sales
exceed total costs and expenses. What happens when
total sales and total costs are equal?

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The Concept of Break-Even
no difference
between total
sales and total
no profit or loss
cost

Break-Even

no additional
money gained, sales were at least
but nothing is enough to cover
lost all expenses

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 The Concept of Break-Even

To represent the concept in an equation:

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 The Concept of Break-Even

● important in guaranteeing profit

● vital in deciding the proper pricing, volume of
products, and overall business plan

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 Break-Even

Closer
Look

1.A dozen eggs are bought for

₱96 and sold for ₱8 each. Was
the selling transaction break-
even?

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 Break-Even

Closer
Look

2.Buying a ticket for two that is

worth ₱4,500 and selling each for
₱2,250 results in a break-even. Is
this correct?

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 Determining the Break-Even Point

The point where revenue and total cost meet is called

the break-even point. At this point, a business
neither earns a profit nor experiences loss.

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 How to Determine Break-Even Point

where:
BEP = break-even point
FC = total fixed cost
VC = variable cost per unit
P = price per unit
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 Example 1

Closer
Look

1. The total fixed cost of a certain product is ₱36,000

while its variable cost per unit is ₱20. Determine
the break-even point if each unit is sold for ₱80.
total fixed cost = ₱36,000
variable cost per unit = ₱20
price per unit = ₱80

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 Example 2

Closer
Look

2. What is the break-even point of a small snack-

house business if their total fixed cost and variable
cost per unit are ₱6,000 and ₱70, respectively, and
their food is priced at ₱150 each order?
total fixed cost = ₱6,000
variable cost per unit = ₱70
price per unit = ₱150
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 Check Your Progress
Compute the break-even point of a business if
1 each product is sold for ₱400 with a fixed cost of
₱14,000 and a variable cost per unit of ₱200.

Answer area

73
 Check Your Progress

At which point does break-even happen when the

2 total fixed cost is six times the variable cost per
unit of ₱1,200 and a unit price of ₱2,000?

Answer area

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 Problems Involving Break-Even

Solving for the break-even point allows a business to

determine its margin for safety.
● How much lower can the price get without risking
loss?
● What is the minimum sales required to avoid loss?

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 Example 1

Closer
Look

An artist makes handmade figurines at home. With a

good number of orders, he is considering mass
production of his artwork to sell in stores. He estimated a
fixed cost of ₱76,000 for the equipment, whereas ₱100
for the labor and packaging of each item. If each figurine
is sold for ₱900, what sales volume does he need to carry
out to reach the break-even point?

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 Example 2

Closer
Look

Gina sells halo-halo, and she is considering a new recipe.

She wants to know if introducing a new recipe will have
an impact on her business. Help her determine the break-
even point given the following:
fixed costs = ₱15,000 (total for the month)
variable cost = ₱25 (per order)
price per unit = ₱55 (per order)

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 Check Your Progress
Mr. Cheng runs a manufacturing business. He records
yearly expenses of ₱600,000 and variable expenses per
1 unit of ₱150. If the selling price per unit of his product is
₱300, how many units must his company produce yearly
to break even?
Answer area

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 Check Your Progress
Gene designs customized tumblers. She sells them for
₱350 each. Plain containers cost her ₱200 per unit, and
2 her monthly utilities (rent and electricity) cost her ₱9,900.
How many customized tumblers should she sell to break
even?
Answer area

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Keep in Mind

● Break-even point can be represented graphically:

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 Practice Your Skills

Let’s Break Even

Ben is a multi-business owner. Below are the total fixed costs,
variable costs per unit, and the prices per unit for the product
he sells and the services he provides. Complete the table with
the missing values.
Business Total Fixed Variable Price Per BEP
Cost Cost Per Unit
Unit
Car Wash ₱50,000 ₱120 ₱200

Water ₱139,500 ₱5 9,300 bottles

Refilling
Barber Shop ₱60 ₱100 1,625 heads
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 Challenge Yourself

Solve the following problems:

1. Walter thinks that he needs at least 318 customers in
order to cover all costs and expenses in his massage
clinic. If each customer has to pay ₱250 per hour and
the total fixed cost and variable cost per unit are
₱34,980 and ₱140, respectively, is Walter’s claim
correct? (Assume that each customer will be
massaged for 1 hour only.)
Answer area

82
 Challenge Yourself

Solve the following problems:

2. Vivian sells homemade cookies. The amount she
prepares for the fixed expenses is ₱6,600. If she allots
₱80 for each box, how many boxes does she need to
sell in order to break even? (1 box = ₱180)

Answer area

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