Differentiating Mark-on, Mark-down, and Mark-up.pptx

ABM 11
BUS MATH
Q1 WEEK 2

1. DIFFERENTIATING Presented by: Group 2 Lesson 2 Mark-On, Mark-Down, and Mark-Up

2. OBJECTIVES: K: Define and differentiate mark-on, mark-down, and mark-up; S: Compute for the mark-up, mark-down, mark-on and margin percentages of given commodities or services based on stated conditions; and A: Appreciate the application of mark-up, mark-down and mark-on on business enterprises in a changing environment.

3. PRE-ACTIVITY: What would be your basis in determining the cost of a stick of banana cue? Assume that you will be planning for a food sale in front of your house and you decided to sell banana cue. Upon planning on your new business, you come up with a thought on how much will a stick of banana cue cost.

4. PRE-ACTIVITY: list all the ingredients and materials you will need for your banana cue business: In order to determine the cost per stick of banana cue, RAW MATERIALS EXPENSES banana (saba) sticks sugar cooking oil space for selling cook's salary vendor's salary tissue wrapper for take-out orders LPG

5. PRE-ACTIVITY: you will estimate the cost of the raw materials you will need for the banana cue. Based on the above list of materials and expenses needed to start your business, RAW MATERIALS ESTIMATED COST banana (saba) sticks sugar cooking oil ₽2 per piece ₽20 per bundle of 100 ₽50 per kilo ₽50 per liter

6. PRE-ACTIVITY: Based on this number, you will estimate the amount of raw materials per day you would need and come up with the following: How many sticks of banana cue do they intend to sell per day? Let us say that you are going to sell 100 sticks per day. 200 pieces of bananas (saba) 1 kg of sugar 1 liter of oil 100 sticks

7. PRE-ACTIVITY: From here, the cost of the raw materials per day can already be easily determined. RAW MATERIALS COST banana (saba) sticks sugar cooking oil ₽ 400 ₽ 20 ₽ 75 ₽ 50 TOTAL ₽ 545

8. PRE-ACTIVITY: Now it is time to account for the other additional expenses. OTHER EXPENSES COST space for selling cook’s salary vendor’s salary tissue 5% of profit wrapper (for take-out orders) TOTAL ₽ 400 ₽ 400 ₽ 50 ₽ 50 ₽ 900 + 5% profit

9. NOTE: It is possible to resort to avoiding the expenses for the cook’s and vendor’s salaries by assuming that roles yourself without expecting any pay. Still, it is important to note that these are expenses that actual business owners must plan for. Based on these estimates, what would be your intended selling price of your banana cue per stick?

10. COST PRICE This is usually computed on a per unit basis. -is the price that a company or store has to pay for the goods it is going to sell the price that has to be spent to produce goods or services before any profit is added.

11. OPERATING COST -is the price (per unit) incurred relative to the production and sale of a commodity.

12. SOME BUSINESSES MAY CHOOSE TO INCLUDE THE COOK’S SALARY AS PART OF THE COST PRICE. Note that this is acceptable. In fact, if the only product of the business is banana cue, then the cook’s salary can reasonably be included in the cost price. If, however, the banana cue is not the only product being sold by the business, then it might be a better option to include the cook’s salary as part of the operating expense of the business.

13. SELLING PRICE -is the price at which the commodity is sold per unit.

14. PROFIT -is money earned after the cost price and the operating costs are accounted for after the sale of a commodity.

15. MARK-UP -is the difference between the selling price and the cost price. This is sometimes referred to as margin or gross profit.

16. REMEMBER To compute for the selling price, SELLING PRICE = COST PRICE + OPERATING COST + PROFIT P where: selling price cost price operating expenses profit S = C + E + P E C S

17. REMEMBER To compute for the mark-up, MARK-UP = SELLING PRICE - COST PRICE where: selling price cost price mark-up MU = S - C S C MU

18. EXAMPLE 1. Aling Ana would like to sell little trinkets she purchased from Divisoria for ₽12 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, a. Determine the mark-up price for each trinket. b. Help Aling Ana determine the selling price for each trinket. Solution: Given: C = ₽12 E = 25% of the Cost = 0.25 x 12 P = 15% of the Cost = 0.15 x 12 What is asked? Mark-up price MU , and Selling price S

19. EXAMPLE 1. The mark-up price for each trinket is ₽4.80. a. MU = E + P = (0.25 x 12) + (0.15 x 12) = 3 + 1.80 = ₽4.80 Tip: Since MU = S - C and S = C + E + P, it follows that MU = E + P b. S = C + MU = 12 + 4.80 = ₽16.80 Tip: Since MU = S - C, by algebraic manipulation, it follows that S = C + MU Aling Ana should sell each trinket at ₽16.80.

20. EXAMPLE 2. A jacket which costs ₽1,350 is being sold at ₽2,025. What is the rate of mark-up based on cost? Rate of Mark-up = 2025 - 1350 1350 = 0.5 MUC% = 50% Solution: The jacket has a 50% mark-up based on its cost. Tip: Mark-up based on its cost: MUC% = MU/C x 100%

21. EXAMPLE 3. A top costs Mang Mario ₽280 and he decides to mark it up by 30% of the selling price. Find the selling price and mark-up for the said top. Solution: 100% - 30% = 70% Cost of top is 70% of the selling price. C = 0.7 ; S = 280 S = 280 0.70 S = ₽400 Mang Mario sells the top at ₽400.

22. EXAMPLE 3. The mark-up on the top is ₽120. Tip: C = S - MU C = S - 0.30 x S since MU = 30% x S C = (1 - 0.3) x S C = 0.70 x S MU = S - C MU = 400 - 280 MU = ₽120

23. PRETEND THAT DURING THE ACTUAL FOOD SALE, YOU REALIZE THAT THERE IS SUCH A HIGH DEMAND FOR YOUR BANANA CUE AND THAT BUYERS CAN EASILY AFFORD THE SELLING PRICE YOU HAVE PEGGED. Some businesses will want to take advantage of this peak season and thus, increase the prices already pegged for their commodities. This is what we call the mark-on.

24. REMEMBER To compute for the mark-on, MARK-ON = PEAK SELLING PRICE - REGULAR SELLING PRICE PS where: regular selling price peak selling price S = C + E + P S

25. SOME OF THE COMMON REASONABLE INSTANCES WHERE MARK-ON IS OBSERVED: a calamity has hit the source of a raw material or commodity therefore affecting its supply seasonal demands (Christmas items, Valentines, etc.) special occasion is being celebrated (commemorative, death anniversary, etc.)

26. EXAMPLE 4. Manang Crising observes that market goers prefer to buy fish from her because there is an undersupply of meat in the market this season. She then decides to increase the price of galunggong by ₽10 per kilo. If the cost of galunggong is ₽90 per kilo with a 35% mark-up, what is its new selling price with the additional increase of ₽10? By how much is the rate of mark-up based on cost increased by adding ₽10 to the regular selling price of the galunggong?

27. EXAMPLE 4. Solution: MU = 0.35 x S MU = 0.35 x 90 MU = ₽31.50 Selling price before increase: S = C + MU S = 90 + 31.50 S = ₽121.50 Selling price after increase: PS = S + MO PS = 121.50 + 10 PS = ₽131.50

28. EXAMPLE 4. Hence, the mark-up is increased by 46.11%-35% = 11.11% by the additional mark-on of ₽10 imposed by Manang Crising. Combined Rate of Mark-up and Mark-on = 31.50 + 10 90 = 0.4611 = 46.11%

29. EXAMPLE 5. Yvette’s Flower Shop imposes a 45% mark-up on flowers delivered to them for sale. During All Saint’s Day, however, an additional mark-on of 25% of the regular selling price is added on. Determine the unit price of 300 roses worth ₽15,000 delivered to Yvette’s Flower Shop during All Saint’s Day. How much is the selling price of each rose during All Saint’s Day at this flower shop? Unit Price = 15000 300 = ₽50 Solution:

30. EXAMPLE 5. Each rose sells for ₽90.65 at Yvette’s Flower Shop during All Saint’s Day. MU = 0.45 x C MU = 0.45 x 50 MU = ₽22.50 S = C + MU S = 50 + 22.50 S = ₽72.50 MO = 0.25 x S MO = 0.25 x 72.50 MO = ₽18.125 MO PS = S + MO PS = 72.50 + 18.15 PS = ₽90.65 ₽18.15

31. THIS TIME CONSIDER THAT THE SALE OF YOUR BANANA CUE IS COMING IN SLOW. You may need to sell it at a Discounted Price or what is commonly known as the Sale Price.

32. MARK-DOWN -is the difference between the regular selling price and the sale price.

33. REMEMBER To compute for the mark-down, MARK-DOWN = SELLING PRICE - SALE PRICE SP where: sale price selling price MD = S - SP S MD mark-down

34. MARK-DOWNS COMMONLY HAPPEN WHEN THE MALL DECIDES TO SELL THEIR ITEMS AT CUT DOWN PRICES TO CLEAR THEIR WAREHOUSE COLLECTION. For instance, some items which usually sold for ₽150 are sold at 50% off during mall sales and so the mark-down price is set at ₽75.

35. OTHER INSTANCES OF MARK-DOWN ARE THE FOLLOWING: the item is a perishable item and it is best to dispose of it sooner than simply throw it away the item has become dirty or worn out, or possibly out of style competition forces the marking down of an item

36. REMEMBER THAT RATES OF MARK-DOWNS ARE ALWAYS COMPUTED BASED ON THE SELLING PRICE. Note that it is possible that instead of making the business owner earn a positive profit, selling an item on sale sometimes gives rise to a negative profit. In this case, the profit is said to be a loss.

37. WHEN AN ITEM IS GIVEN A SELLING PRICE WHERE THE PROFIT ENDS UP BEING ZERO, THIS IS SAID TO BE THE BREAK-EVEN PRICE. In this case, the selling price is simply equal to the total of the cost price and the operating expenses.

38. EXAMPLE 6. Carlo was able to buy a pair of shoes regularly priced at ₽3,500 for only ₽2,100. a. What was the amount of the mark-down? b. What was the rate of the mark-down? Solution: MD = S - SP MD = 3500 - 2100 MD = ₽1400 MD% = MD x 100% S MD% = 1400 x 100% 3500 MD% = 40% The amount of the mark-down is ₽1,400 which is equivalent to a 40% mark-down.

39. EXAMPLE 7. During a Midnight Madness Sale, a board game regularly priced at ₽8,500 was sold at 55% discount. The cost of the board game is ₽3,450 and expenses are 14% of the regular selling price. a. What was the amount of the mark-down? b. What was the rate of the mark-down? Solution: a. 100% - 55% = 45% (The sale price is 45% of the selling price.) SP = 0.45 x S SP = 0.45 x 8500 SP = ₽3,825 The sale price of the board game is ₽3,825.

40. EXAMPLE 7. b. Ctotal = C + E Ctotal = 3450 + 0.14 x 8500 Ctotal = ₽4,640 P = SP - Ctotal P = 3825 - 4640 P = - ₽815 (loss) The loss made on the sale was ₽815.

41. UNDERSTANDING HOW INFLATION AND DEFLATION OF PRICES IS VITAL IN ANY COMMERCIAL ENTERPRISE IN ADDITION TO THE CUSTOMER. These matters are what we called mark-up, mark-down, and mark-on. We can use this learning and apply it in our daily lives, like when we are in a business posting mark-downs for sale, and mark-ups and mark-on for profit on your reselling. These are the most common applications that we must know.

42. THANK YOU for listening!