11

Business
Mathematics
Quarter 1 – Week 6:
Key Concepts in Buying and Selling
RINA N. ESPAÑOL

Introductory Message
For the facilitator:

Welcome to the Grade 11 Business Mathematics Self-Learning Module (SLM) on Key

Concepts of Buying and Selling!

This module was collaboratively designed, developed and reviewed by educators both from
public and private institutions to assist you, the teacher or facilitator in helping the learners
meet the standards set by the K to 12 Curriculum while overcoming their personal, social,
and economic constraints in schooling.

This learning resource hopes to engage the learners into guided and independent learning
activities at their own pace and time. Furthermore, this also aims to help learners acquire the
needed 21st century skills while taking into consideration their needs and circumstances.

In addition to the material in the main text, you will also see this box in the body of the
module:

Notes to the Teacher

This contains helpful tips or strategies that will
help you in guiding the learners.

As a facilitator you are expected to orient the learners on how to use this module. You also
need to keep track of the learners' progress while allowing them to manage their own
learning. Furthermore, you are expected to encourage and assist the learners as they do the
tasks included in the module.

For the learner:

Welcome to the Grade 11 Business Mathematics Self-Learning Module (SLM) on Key
Concepts of Buying and Selling!

The hand is one of the most symbolized part of the human body. It is often used to depict
skill, action and purpose. Through our hands we may learn, create and accomplish. Hence,
the hand in this learning resource signifies that you as a learner is capable and empowered to
successfully achieve the relevant competencies and skills at your own pace and time. Your
academic success lies in your own hands!

This module was designed to provide you with fun and meaningful opportunities for guided
and independent learning at your own pace and time. You will be enabled to process the
contents of the learning resource while being an active learner.

This module has the following parts and corresponding icons:

This will give you an idea of the skills or

competencies you are expected to learn in the
module.

This part includes an activity that aims to check

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If you get all the answers correct (100%), you
may decide to skip this module.

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This section provides a brief discussion of the

lesson. This aims to help you discover and
understand new concepts and skills.
 This comprises activities for independent
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Key at the end of the module.

This includes questions or blank sentence/

paragraph to be filled in to process what you
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This section provides an activity which will

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of mastery in achieving the learning
competency into real life situations or concerns.

In this portion, another activity will be given to

you to enrich your knowledge or skill of the
lesson learned. This also tends retention of
learned concepts concerns.

This contains answers to all activities in the

module.

At the end of this module you will also find:

References This is a list of all sources used in developing

this module.

The following are some reminders in using this module:

1. Use the module with care. Do not put unnecessary mark/s on any part of the module.
Use a separate sheet of paper in answering the exercises.
 2. Don’t forget to answer What I Know before moving on to the other activities included
in the module.
3. Read the instruction carefully before doing each task.
4. Observe honesty and integrity in doing the tasks and checking your answers.
5. Finish the task at hand before proceeding to the next.
6. Return this module to your teacher/facilitator once you are through with it.

If you encounter any difficulty in answering the tasks in this module, do not hesitate to
consult your teacher or facilitator. Always bear in mind that you are not alone.

We hope that through this material, you will experience meaningful learning and gain deep
understanding of the relevant competencies. You can do it!

This module was designed and written with you in mind. It is here to help you master the
Difference between Mark-up and Margins. The scope of this module permits it to be used
in many different learning situations. The language used recognizes the diverse vocabulary
level of students. The lessons are arranged to follow the standard sequence of the course. But
the order in which you read them can be changed to correspond with the textbook you are
now using.

This module is comprised of lessons, namely:

1. Difference between Mark-up and Margin.
2. The use of Margins in sales.

After going through this module, you are expected to:

1. Differentiate mark-up from margins. (ABM_BM11BS-Ih-3)
2. Describe how gross margins is used in sales. (ABM_BM11BS-Ih-4)
 Find how much you already know about the topic in this module. Take note of the
items that you were not able to answer correctly and find the right answer as you go through
this module.

Write the letter of the correct answer on your answer sheet.

1. What is the best definition of Mark-up?

a. Profit plus Expenses
b. Amount added to a product
c. Percent of mark-up based on selling price
d. Percent of mark-up based on cost

2. Mark up rate is defined as:

a. Percent of mark-up based on selling price.
b. Percent of mark-up based on cost
c. Percent of mark-up from the original price
d. None of these

3. Mark-up rate based on cost is defined as

a. Percentage increase in the original price
b. Percentage increase based on cost
c. Percentage increase based on selling price
d. None of these

4. A store pays PhP75.00 for a bag of candy. If the store wants to mark-up the price
60%, how much is the markup amount for the bag of candy?
a. PhP105.00
b. Php30
c. PhP120.00
d. PhP45.00
5. A bookstore pays PhP400 for a novel. They add a PhP150 markup to the price. What
is the percent of markup?
a. 40%
b. 37.50%
c. 26.70%
d. 0.375%

6. Markup is _________________ to the original price.

a. Subtracted
b. Divided
c. Added
d. Multiplied

7. Mrs. Allison buys Gucci bags wholesale for PhP1400.00 and marks them up 900% to
sell on her online store, what is the selling price of the bags?
a. PhP14,000.00
b. PhP46,400
c. PhP12,600
d. PhP11,200.00

8. Carmen does buy and sell. She bought a perfume for PhP450.00. She sold it for
PhP600.00. How much was her margin?
a. PhP112.50
b. PhP125.00
c. PhP150.00
d. PhP155.00

9. Carmen does buy and sell. She bought a perfume for PhP450.00. She sold it for
PhP600.00. What was the rate of her margin?
a. 25%
b. 20%
c. 30%
d. 33.33%

10. Carmen does buy and sell. She bought a perfume for PhP450.00. She sold it for
PhP600.00. What was the rate based on cost?
a. 25%
b. 33.33%
c. 35%
d. 40%
 Lesson
Differentiate Mark-up from Margins
4

Hello there! People were attracted in buying and selling online. Setting the
right price is important in order to gain profits. How you price your goods will depend on
whether you buy your products in bulk, or if you buy them from different vendors at different
prices. As you proceed in this lesson, you will be able to acquire knowledge in setting up
prices that would absorb the cost and the operating expenses and still give a margin to earn
profit. (Mariano, 2016)

(Golubeva, 2019)

For you to understand more of the Mark-up and Margin, consider the given example.
Rina sells an item for PhP200.00 online. The item costs was PhP140.00, its gross
margin was PhP60.00
 Margin Markup based on
Amount
(Markup Based on Sales) Cost

Cost PhP140.00 70% 100%

Markup PhP60.00 30% 42.86%
Selling Price PhP200.00 100% 142.86%

After examining the table, please try to answer the following questions.
1. How did the Margin of 30% computed?
2. How did the Mark-up based on Cost computed?
3. What is the difference between the Mark-up based on Sales and the Mark-up based on
Cost?

You can think of markup as the extra percentage that you charge your customers (on
top of your cost). (Thomas, 2017)
Illustrative Example 1.
Now let’s make the example a little more concrete. Let’s say the cost for one of EO
Optical products, eyeglasses, is set at PhP882. That PhP882 is how much it costs EO Optical
to create a single pair of the eyeglasses. They will then turn around and sell each eyeglass for
the price of PhP1 764.

If we run through that computation, we arrive at a markup of 100%:

Price−Cost
=Mark up
Cost
1764−882
=1.00
882
That is 100% Mark up.

Note to the Students

 Mark up is the amount by which the cost of a product is increased in order to derive
the selling price. To use the definition, we will proceed with the previous example:

Illustrative Example 2.
A mark up of PhP60.00 to the PhP140.00 cost yields the PhP200.00 selling price.
Stated as percentage, the mark up percentage is 42.86% (computed as the mark up amount
divided by the product cost). This is the mark up based on cost.
Price−Cost
=Mark up based on cost
cost
60
=42.86 %
140

Illustrative Example 3.
A jacket which costs PhP1,350.00 is being sold at PhP2,025.00. What is the rate of
markup based on cost?
Price−Cost
=Mark up based on cost
cost
2025−1350
=0.50
1350
The jacket has a 50% mark up based on cost.

What about margin?

Now that we’ve defined markup and how it helps you decide on a price, we should
discuss margin. The type of margin we’re discussing in this case is gross profit margin,
which describes the profit that you earn on a product as a percentage of the selling price.

Margin is sales minus the cost of goods sold. Gross margin is easier to arrive at and
is, therefore, easier to use as well.

Illustrative Example 3.
 Rina sells an item for PhP200.00 online. The item costs was PhP140.00, its gross
margin was PhP60.00 Stated as a percent, the margin is 30% (computed as the markup
divided by sales). This is the markup based on sales or selling price.
Price−Cost
=Mark up based on sales
selling price
60
=30 %
200
The item has a 30% mark up based on sales (margin).
Illustrative Example 4.
Peter decides to impose a mark-up of PhP25 on each face shields he sells to his
neighbors and friends. This represents a 20% mark-up based on the selling price (margin).
Find the selling price of the face shields Peter sells.
Price−Cost 25
=Mark up based on sales =20 %
selling price selling price
25
=Selling price
0.20
125=selling price
The selling price of each face shields Peter sells is PhP125.00

Note to the Students

The margin is addressing the profit as it relates to selling price; whereas,

the mark up addresses the profit as it relates to cost price.
The formula in finding Mark up is:
MU =SP−CP

Mark up based on Cost:

SP−CP
MU CP =
CP

Mark up based on Selling Price:

SP−CP
MU SP=
SP

Where:
MU =Mark up
SP=Selling Price
C P=Cost Price
 Since you already know how to get mark up and margin, try to answer the
following exercises below. Show your computation on a separate sheet of paper.
A. Complete the table:

Selling Price Cost Mark up MUcost (%) MUsp (%)

a. PhP480 (1) PhP120 (2) (3)

b. PhP900 (4) PhP200 (5) (6)

c. (7) PhP300 PhP120 (8) (9)

d. (10) PhP600 PhP230 (11) (12)

e. (13) PhP400 (14) 30% (15)

f. (16) PhP500 (17) 75% (18)

g. (19) PhP550 (20) 60% (21)

h. (22) PhP350 (23) (24) 26%

i. Php550 (25) (26) (27) 30%

j. PhP1200 (28) (29) (30) 50%

 Lesson
Gross Margins as used in Sales
4.1

In most instances, however, markup is expressed as a percent of selling price

(margin). Consider the table below:

Amount Margin MU based on Cost

Selling Price PhP1050 100% 150%

Cost PhP700 66.67% 100%

Markup PhP350 33.33% 50%

To express the cost and the mark up in percent, we will use the formula for markup
based on cost
SP−CP
MU CP =
CP
1050−700
MU CP =
700
350
MU CP =
700
1
MU CP =
2
 MU CP =0.5=50 %

To express the selling price and the mark up in percent, we will use the formula for
markup based on selling price
SP−CP
MU SP=
SP
1050−700
MU SP=
1050
350
MU SP=
1050
1
MU SP=
3
MU SP=0.3333=33.33 %

After doing the above activity, try to answer the questions below that will help
you understand clearly the concept.

1. What did you notice about the difference between the percentage of MU SP and MU CP
?
2. Why do you think they are different when the given markup is the same?
3. Collaborate with your classmates in your chat group in answering the given questions.

You will notice that the markup, if stated in terms of selling price (margin) is lower
(33.33%) as against markup based on cost (50%), although our markup in pesos remains the
same (PhP150.00). This is the primary reason why traders usually express their markup based
on selling price (margin) to make it appear that they have lower markup or gross profit.
Gross profit margin is a ratio that indicates the performance of a company's sales and
production. This ratio is made by accounting for the cost of goods sold—which include all
costs generated to produce or provide your product or service—and your total revenue.
(Carlson, 2019)
 The higher the gross margin, the more capital a company retains on each dollar of
sales, which it can then use to pay other costs or satisfy debt obligations. The net sales figure
is simply gross revenue, less the returns, allowances, and discounts. (Bloomenthal, 2020)

A. Read and analyze the following statements. If you think the statement suggests an
incorrect idea, rewrite it on the given space, otherwise leave it blank.
1. Gross margin equates to net sales minus the cost of goods sold.
__________________________________________________________________
_________________________________________________________________.

2. The gross profit margin shows the amount of profit made before deducting selling,
general, and administrative costs.
__________________________________________________________________
_________________________________________________________________.
3. Gross margin can also be shown as gross profit as a percent of net sales.
__________________________________________________________________
______________________________________________________________.

B. In your own words, discuss the difference between margin and markup.
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_____________________________________________________________________
_____________________________________________________________________
________________________________________________________________.

In your own home, make a research for you to generate money that you will use to
buy something that you are sure you can sell. Compute for the markup. What percent is your
cost? Your selling price? Were you able to sell it? Explain your ways in doing so.

___________________________________________________________________________
___________________________________________________________________________
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________________________________________________________.

Multiple Choice. Choose the letter of the best answer. Write the chosen letter
on a separate sheet of paper.
1. Aling Gloria would like to sell ornaments she purchased from Baclaran for PhP12
each. If the operating cost is set at 25% of the cost and she would like to have a 15%
profit on the cost of each item, determine the markup price for each ornament.
a. PhP4.80
b. PhP5.00
c. PhP5.50
d. PhP6.00

2. A pot cost Manny PhP280 and he decides to mark it up by 30% of the selling price.
Find the selling price for the said pot.
a. PhP550.00
b. PhP500.00
c. PhP450.00
d. PhP400.00

3. Find the cost of a box of pencils being sold for PhP135.00 with a 25% markup based
on selling price.
a. PhP120.50
b. PhP101.25
c. PhP100.75
 d. PhP95.50

4. If the cost of an item is PhP72 and it has a retail price of PhP89, what is the margin?
a. 20%
b. 19.5%
c. 19.1%
d. 18.9%

5. Bev Smith makes hand-braided mats, at a cost of PhP40 per mat, to sell at local craft
shows. She has 30 mats on hand for the next show, and expects to sell them all for a
total of PhP1,800. What is Bev’s markup per mat in percentage?
a. 50%
b. 45%
c. 30%
d. 35%

6. A convenience store buys 1-gallon of milk for PhP149.50 and sells them for
PhP214.50. What is the margin they earn on the milk?
a. 29.5%
b. 29.7%
c. 30.3%
d. 31.3%

7. Given are the definitions of Markup, which is NOT?

a. Markup is the amount of money above the cost of purchase or manufacture
you sell your goods for.
b. Markup is money left after subtracting the cost of the goods sold from the net
sales.
c. Markup is generally used when referring to the sale of products rather than
services.
d. Markup is the amount that a retailer adds to price of a product before selling it
to a customer.

8. If Mark-up is greater than operating expenses, what would the company achieved?
a. mark down
b. break-even
c. net profit
d. loss

9. Abram owns a deli and recently raised his prices due to poor sales. For reporting
purposes, he has to find out the exact markup percentage implemented on his
products. It costs him PhP2500.00 to buy, prepare and store one whole pig. Abram
now sells the full packaged deal of a prepped and ready pig for PhP3750.00.
Determine his markup rate.
 a. 33.33%
b. 45.50%
c. 48%
d. 50%

10. Braided Salon purchases natural hair dyes for PhP1900.00 from a beauty supply
wholesaler. If the owner plans to double the price before selling it to customers, what
is the mark-up rate?
a. 45%
b. 65%
c. 75%
d. 100%

A. In your own home, provide a selection of simple food sale ideas that you can choose
from. Then prepare the list of prices for all the raw materials that you will need for
your chosen food sale idea. Here are some ideas:
● Ice cream
● Fish balls
● Banana cue
● Sago’t gulaman
● Kwek kwek
Based on your estimate, figure out and defend your intended selling price for your
commodity.
You may submit your output as additional output portfolio.

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_____________________________________________________________________
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Assessment What's More What I Know
1. A 1. A
2. D 1. PhP360.00 2. C
3. B 2. 33% 3. B
4. C 3. 25% 4. D
5. A 4. PhP700.00 5. B
6. C 5. 29% 6. C
7. B 6. 22% 7. A
8. C 7. PhP420.00 8. C
9. D 8. 40% 9. A
10. D 9. 29% 10. B
10. PhP830.00

11. 38%

12. 28%

13. PhP520.00

14. PhP120.00

15. 23%

16. PhP875.00

17. PhP375.00
References
Golubeva, H. (2019, November 03). How To Find A Profitable Product To Sell Online.
Retrieved from XCART: https://www.x-cart.com
Mariano, N. L. (2016). Business Mathematics. Quezon City: REX Book Store.
Nesterenko, N. (n.d.). Vector - Vegetable market 2D vector web banner, poster. 123RF.com.
Vector.
Rank, M. (2018). Markup and Discount.
Thomas. (2017). How to calculate margin vs. markup. Retrieved from inflow:
https://www.inflowinventory.com/