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DISCOUNT

This document discusses discounts, including trade discounts. It defines a discount as a reduction from the full price. The net price is calculated as the unit price minus the discount amount. Gross sales are calculated by multiplying the selling price by the quantity. A trade discount is a special discount given by suppliers, and is calculated as the trade discount rate multiplied by the selling price. A trade discount series provides multiple tiered discounts based on purchase volume and payment terms. An example shows how to calculate the total trade discount for a series offering 20%, 10%, and 5% discounts.

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Jannette Ramos
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149 views11 pages

DISCOUNT

This document discusses discounts, including trade discounts. It defines a discount as a reduction from the full price. The net price is calculated as the unit price minus the discount amount. Gross sales are calculated by multiplying the selling price by the quantity. A trade discount is a special discount given by suppliers, and is calculated as the trade discount rate multiplied by the selling price. A trade discount series provides multiple tiered discounts based on purchase volume and payment terms. An example shows how to calculate the total trade discount for a series offering 20%, 10%, and 5% discounts.

Uploaded by

Jannette Ramos
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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DISCOUNT

DISCOUNT
• A reduction from the full or standard amount
of a price or value.
• May be obtained by multiplying the unit price
by the discount rate.
• Discount= UP x DR
where: UP- unit price
DR- Discount rate
• Net Price is the difference between the unit
price and the discount
• Net Price = UP - D
• Where: UP- unit price
D- Discount
• GROSS SALES is obtained by multiplying the
selling price by the quantity
• Gross Sales= Selling price x Quantity
Example:
Selling Price of school bag is Php200. each.
Bought 50 pcs. How much is the gross sales?

Php200 X 50pcs = Php1,000.00


SINGLE TRADE DISCOUNT
• incentive or loyalty discount.
• Cash discount
• Volume discount
Trade Discount
• the supplier normally gives a special discount
• This discount is referred to as trade discount.
• TRADE DISCOUNT = TRADE DISCOUNT RATE x
SELLING PRICE
Example
• My regular beef supplier gives me a 5% discount on my
meat purchases every week. If the price of beef brisket
this week is PhP375 per kilo and I am planning to buy 1.5
kilos, how much trade discount will I receive from this
purchase
Total Selling Price = 1.5 x 375 = PhP562.50
Trade Discount = 0.05 x 562.50 = PhP28.13

I will get a total trade discount of PhP28.13 for my 1.5 kg of


beef brisket this week
TRADE DISCOUNT SERIES
• a supplier may want to give its distributor a
discount of 20/10/5.
• To interpret, the supplier may, in addition to
the 20% discount it gives the distributors,
slash another 10% from the resulting
discounted price if the distributor purchases a
set minimum volume of items and another
additional 5% if the purchase is paid in cash.
EXAMPLE
• If a popular shoe brand promotes this
discount of 20/10/5 for a minimum volume of
250 pairs of shoes.
• Assuming that the unit selling price of the
shoes is PhP2,500, compute the trade
discount per pair of shoes that a distributor
avails of under this scheme.
First Trade Discount = 0.20 X 2,500 = PhP500
Initial Discounted Price = 2,500 – 500 =PhP2,000
OR
Initial Discounted Price = (1 – 0.80) x 2,500 = PhP2,000
Second Trade Discount = 0.10 X 2,000 = PhP200
Second Discounted Price = 2,000 – 200 = PhP1,800
OR
Second Discounted Price = (1 – 0.10) x 2,000 = PhP1,800
Last Trade Discount = 0.05 X 1,800 = PhP90
Total Trade Discount = 500 + 200 + 90 = PhP790

The distributor will be able to avail of a total of PhP790 of trade discounts if


he purchases a minimum of 250 pairs of shoes

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