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Lesson Mark Down

Lesson on Business Math

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16 views

Lesson Mark Down

Lesson on Business Math

Uploaded by

JovenIsmaName
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Mark-down

Mark-down refers to the reduction in the selling price of a product to stimulate sales, clear excess
inventory, or attract budget-conscious customers. It is the opposite of mark-up, aiming to lower the
price from the initial selling price.

Formula:
𝑃𝐹𝑆 = 𝑃𝐼𝑆 − 𝑀𝐷
Where:
𝑃𝐹𝑆 – The final selling price
𝑃𝐼𝑆 – the initial selling price
𝑀𝐷 – the mark-down value

Also:
𝑀𝐷 = 𝑃𝐼𝑆 × 𝑀𝐷𝑅𝐼𝑆 ; 𝑀𝐷 = 𝑃𝐹𝑆 × 𝑀𝐷𝑅𝐹𝑆
Where:
𝑀𝐷𝑅𝐼𝑆 – percentage mark-down based on the initial selling price
𝑀𝐷𝑅𝐹𝑆 – percentage mark-down based on the final selling price

Note:
Markdown and markup are sometimes used together by sellers when the goal is to reduce the price
while still ensuring a profit margin. That’s why the process is sometimes approached as markup first and
then markdown, allowing for a strategic balance where reduced prices are still profitable.

Example 1:
A local store has a shirt priced at ₱800. They decide to mark it down to ₱500 to attract more customers.
Calculate the mark-down value and the percentage markdown based on the initial selling price.
Solution:

S1. Given: 𝑃𝐼𝑆 = 800, 𝑃𝐹𝑆 = 500

S2. Required: 𝑀𝐷 and 𝑀𝐷𝑅𝐼𝑆

𝑀𝐷 = 𝑃𝐼𝑆 × 𝑀𝐷𝑅𝐼𝑆
𝑃𝐹𝑆 = 𝑃𝐼𝑆 − 𝑀𝐷 ;
S3. Working Equation(s): 𝑀𝐷
𝑀𝐷 = 𝑃𝐼𝑆 − 𝑃𝐹𝑆 𝑀𝐷𝑅𝐼𝑆 =
𝑃𝐼𝑆

𝑀𝐷 = 𝑃𝐼𝑆 − 𝑃𝐹𝑆 𝑀𝐷 300


𝑀𝐷𝑅𝐼𝑆 = =
S4. Solution: 𝑀𝐷 = 800 − 500 𝑃𝐼𝑆 800

𝑀𝐷 = 𝟑𝟎𝟎 𝑀𝐷𝑅𝐼𝑆 = 0.375 = 𝟑𝟕. 𝟓%

Therefore, the markdown value of a shirt is ₱300.00 and


S5. Conclusion: the markdown rate based on the initial selling price is
𝟑𝟕. 𝟓%.

Example 2:
A gadget store is offering a 25% mark-down on smartphones that originally cost ₱12,000. Calculate the
mark-down value, and find the new selling price after the mark-down.
Solution:
S1. Given: 𝑀𝐷𝑅𝐼𝑆 = 25%, 𝑃𝐼𝑆 = 12 000

S2. Required: 𝑀𝐷 and 𝑃𝐹𝑆

S3. Working Equation(s): 𝑀𝐷 = 𝑃𝐼𝑆 × 𝑀𝐷𝑅𝐼𝑆 𝑃𝐹𝑆 = 𝑃𝐼𝑆 − 𝑀𝐷

𝑀𝐷 = 12 000 × 0.25 𝑃𝐹𝑆 = 12 000 − 3 000


S4. Solution:
𝑀𝐷 = 𝟑 𝟎𝟎𝟎 𝑃𝐹𝑆 = 𝟗 𝟎𝟎𝟎

Therefore, the markdown value on smartphones that


S5. Conclusion: originally cost ₱12 000 is ₱𝟑 𝟎𝟎𝟎 and the new selling price
is ₱𝟗 𝟎𝟎𝟎.

Example 3:
A cultural store in Bulusan purchases clay pots (paso) from local potters for Php 200 each and applies
a 30% markup for selling. Due to decreased demand caused by technological advancements, the
store owner decided to lower the price, implementing a 30% markdown. Calculate the original selling
price, the markdown value, the new selling price, and the markdown rate based on the new selling
price.
Solution:

S1. Given: 𝑃𝐶 = 200, 𝑀𝑈𝑅𝐶 = 30%, 𝑀𝐷𝑅𝐼𝑆 = 30%

S2. Required: 𝑃𝑆 , 𝑀𝐷 , 𝑃𝐹𝑆 , and 𝑀𝐷𝑅𝐹𝑆

𝑃𝑆 = 𝑃𝐶 + 𝑀𝑈
Let 𝑃𝑆 = 𝑃𝐼𝑆
𝑀𝑈 = 𝑃𝐶 × 𝑀𝑈𝑅𝐶
𝑀𝐷 = 𝑃𝐼𝑆 × 𝑀𝐷𝑅𝐼𝑆
𝑃𝑆 = 𝑃𝐶 + 𝑃𝐶 × 𝑀𝑈𝑅𝐶
𝑀𝐷 = 𝑃𝑆 × 𝑀𝐷𝑅𝐼𝑆
S3. Working Equation(s): 𝑃𝑆 = 𝑃𝐶 (1 + 𝑀𝑈𝑅𝐶 )

Let 𝑃𝑆 = 𝑃𝐼𝑆 𝑀𝐷 = 𝑃𝐹𝑆 × 𝑀𝐷𝑅𝐹𝑆


𝑃𝐹𝑆 = 𝑃𝐼𝑆 − 𝑀𝐷 𝑀𝐷
𝑀𝐷𝑅𝐹𝑆 =
𝑃𝐹𝑆 = 𝑃𝑆 − 𝑀𝐷 𝑃𝐹𝑆

𝑃𝑆 = (200)(1 + 0.3) 𝑀𝐷 = 260 × 0.3


𝑃𝑆 = 𝟐𝟔𝟎 𝑀𝐷 = 𝟕𝟖

S4. Solution: 𝑀𝐷 78
𝑃𝐹𝑆 = 260 − 78 𝑀𝐷𝑅𝐹𝑆 = =
𝑃𝐹𝑆 182
𝑃𝐹𝑆 = 𝟏𝟖𝟐
𝑀𝐷𝑅𝐹𝑆 = 0.4286 = 𝟒𝟐. 𝟖𝟔%

Therefore, the clay pot had an initial selling price of Php


260, which was reduced by a markdown of Php 78,
S5. Conclusion: resulting in a new selling price of Php 182. This represents
a 42.86% markdown rate based on the new selling
price.
Practice exercises:
1. A bookstore initially prices a novel at ₱350. They decide to mark it down by ₱100 for a
clearance sale. Calculate the new selling price and the percentage markdown based
on the new selling price.
2. A supermarket offers a 15% markdown on all fresh produce. If a kilogram of apples
originally costs ₱120, calculate the mark-down value, and find the new selling price after
the mark-down.
3. A furniture store sells a sofa for ₱10,000. They have decided to reduce it by 20% during
a special promotion. Calculate the mark-down value and find the new selling price after
the mark-down.
4. A local market sells handmade crafts. A decorative vase is initially priced at ₱600. They
decided to mark it down by 25%. Calculate the mark-down value and find the new
selling price after the mark-down.
5. A shoe store is offering a 50% markdown on selected items. If a pair of shoes originally
costs ₱1,200, calculate the mark-down value, the new selling price, and the percentage
markdown based on the new selling price.
6. A toy store marks down the price of a board game from ₱800 to ₱600. Calculate the
mark-down value and the percentage markdown based on the initial selling price.
7. A local market sells fresh seafood. A kilogram of shrimp is initially priced at ₱350. They
decided to mark it down by 10%. Calculate the mark-down value and find the new
selling price after the mark-down.
8. A traditional textile shop in Sorsogon City buys handwoven blankets from local artisans
for Php 300 each and adds a 25% markup. However, due to a surplus, they decided to
apply for a 15% markdown. Calculate the original selling price, the markdown value,
the new selling price, and the markdown rate based on the new selling price.
9. A seafood restaurant in Bulusan sources fresh lobsters from local fishermen at Php 500
per kilogram and marks them up by 40%. To boost sales during a local festival, they
implement a 15% markdown. Calculate the original selling price, the markdown value,
the new selling price, and the markdown rate based on the new selling price.
10. A craft store in Sorsogon City sells handmade candles, initially priced at Php 80 each
after applying a 20% markup on the cost price. Due to a decrease in tourism, they have
decided to offer a 25% markdown to attract more customers. Calculate the original
selling price, the markdown value, the new selling price, the markdown rate based on
the new selling price, and check whether the product still has a profit or not.

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