SOLVING PROBLEMS

INVOLVING BUYING AND

SELLING PRODUCTS
for Business Mathematics Senior High School
(ABM)
Quarter 1 / Week 8.b
 FOREWORD

This Self-Learning Kit for Business Mathematics is specifically

designed for ABM students in the Senior High School to enhance and
improve their abilities in solving problems involving buying and selling
products. This is about understanding and appreciating the use of
mathematics in applying concepts of buying and selling in real life
situations.

Understanding basic math is necessary for profitable business

operations and accurate record keeping. Knowing how to add,
subtract, multiply, divide, round and use percentages and fractions
is the minimum skills needed to acquire and to properly price the
product and meet the right amount of budget.

It is aligned with the BEC of the Department of Education

following the prescribed MELCs (Most Essential Learning
Competencies.

It has the following features proven to be valuable aids to

learning Mathematics even at home.
What happened?
This section contains pre-activities like review of the prior
knowledge and a pretest on what the learners have learned in their
previous discussions.
What I Need to Know? (Discussion)
This section also contains the definition of the terms trade
discount, single trade discount, incentive or loyalty discount, cash
discount, and volume discount. Illustrate the formula in computing
trade discounts and gives examples that clearly shows the
applicability of a mathematical concept.
What I have Learned? (Evaluation/Post Test)
The exercises contained in this section are guaranteed to build
mathematical comprehension, skills, and competence. These serve
as a diagnostic tool to identify the learners’ areas of strengths and
difficulties.
 OBJECTIVES:
At the end of the lesson, the learners are expected to:
K: recall single trade discount is and trade discount series
S: solve problems involving buying and selling products
and discounts; and
A: appreciate the usefulness of buying and selling in real
life situations.

LEARNING COMPETENCY:
Solve problems involving buying and selling products (ABM_BM11BS-
Ij-9)

I. What Happened

REVIEW
How to Compute Selling Price with Markup Based on Cost

➢ For some businesses, cost may be the more logical base for
calculating markup. However, calculating markup based on selling
price is an advantageous method for many retail stores.

➢ You will notice that the markup if stated in terms of selling price as base is
lower than markup based on cost. This is the primary reason why
traders usually express their markup based on selling price to make it
appear that they have a lower markup or gross profit.

➢ To compute the selling price based on cost, we must know the markup
rate. We then multiply the markup rate and add the resulting product
to the cost.

1
 Formulas

How do I calculate
the markup?

Markup = Cost x Markup Rate

How do I calculate
the selling price?

Selling price = Cost + Markup

PRE-TEST:
Answer the following in your activity notebook.

1. Florida Nursery Stock sells hanging baskets to retail outlets at a cost of

P2.58. Most of the outlet’s markup hanging baskets at 150 percent of
cost. What selling price do most outlets put on the hanging baskets?

2. A DVD movie was marked up P125, which was a 40% markup based on
cost. What was the cost of the DVD?

2
II. What You Need To Know

DISCUSSION
TRADE DISCOUNT

The supplier usually recommends the suggested retail price of an item.

However, because there is a line of other people who are involved in
bringing an item to the hands of the consumer, these middlemen expect
their own share of profit also. Hence, the supplier normally gives them a
special discount to grant them a small room for profit. This discount is
referred to as trade discount.

Let us first talk about single trade discounts.

1. When you go to the market and buy meat from a regular vendor or
“suki” (as we say in Filipino), you are sometimes given an incentive or
loyalty discount.
2. When you buy an item which a vendor is willing to give out on
installment, you may be able to convince him/her to give you a cash
discount if you are willing to pay the full amount in cash.
3. During Christmas season and you shop for gifts for your friends and
family, we convince sellers to give us a discount if we buy a stated
minimum number of items. This is called a volume discount.

3
 There are many things that influence the rate of discount given to a
buyer. Ask your students for some reasons they can think of. Some answers
expected would be to encourage volume purchases, to ensure that the
Examples: 1)
item is totally sold out, the season, a client’s purchasing history, or maybe the
economic condition of the 2) community/country.

To compute for the TRADE DISCOUNT:

TRADE DISCOUNT = TRADE DISCOUNT RATE x SELLING PRICE

Examples:

1. 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?

Solution:

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

4
2. My mother admired a pair of earrings that her friend was offering for
PhP24,000, payable in 6 months. She bargained to be given a
discount and her friend agreed to give her 12% if she pays in cash.
How much will my mother have to pay for the pair of earrings?

Solution:

Trade Discount = 0.12 x 24,000

= PhP2,880

Discounted Price = 24,000 – 2,880

= PhP21,120

My mother should pay her friend PhP21,120 in cash to

avail of the discount.

Equivalent Solution:

Since trade discount is 12%, customer pays 88% of the selling price,
that is

Discounted Price = 0.88 x 24,000

= PhP21,120

5
3. For Christmas, Paul gave each of his 34 classmates a shirt with a
unique design for their class remembrance. He found a supplier who
gives 8% discount for a minimum of 25 shirts purchased. The total cost
of the shirts Paul purchased amounted to PhP3,910. How much was
the unit selling price of the shirts?

Solution:

100% – 8% = 92%

(The total price for the shirts Paul bought was only 92% of their
original selling price.)

3910
Original Selling Price =
0.92

= PhP4,250

4250
Unit Selling Price =
34

= PhP125

The unit selling price of the shirts is PhP125.

6
4. Office Corner ordered the following items from their supplier: 50
pens at PhP24 each, 80 pads of paper at PhP19.75 each, 5 reams of
bond paper at PhP1,123.75 each and 25 clear books at PhP249 each.
The supplier gives them a 17% discount. How much will the total
charges be for this order?

Solution:

Total Price for Pens = 50 x 24

= PhP1,200

Total Price for Pads of Paper = 80 x 19.75

= PhP1,580

Total Price for Bond Paper = 5 x 1,123.75

= PhP5,618.75

Total Price of this Order = 1,200 + 1,580 + 5,618.75 + 6,225

= PhP14,623.75

Trade Discount = 0.17 x 14,623.75

= PhP2,486.04

Total Charges = 14,623.75 – 2,486.04

= PhP12,137.71
Office Corner will be billed
or a total of PhP12,137.71.

Trade Discount = (1 – 0.17) x 14,623.75

= 0.83 14,623.75
= PhP12,137.71

7
5. A supplier can cover its cost and earn a reasonable profit if an item
is sold at PhP86.75. If he is willing to grant a maximum of 30% discount,
how much should the selling price of this item be?

Solution:

100% – 30% = 70%

(The sale price for the item must be 70% of its original selling
price.)

86.75
Original Selling Price =
0.7

= PhP123.93

The original selling price of the item must be at least PhP123.93.

8
TRADE DISCOUNT SERIES

There are times when a supplier also designs discounts to encourage

specific behavior from its clients. For instance, a supplier may want to give its
distributor a discount of 20/10/5. This notation represents a trade discount
series. 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. Is this equivalent to a 25% single trade
discount?

Let us discover together.

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

9
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.

Equivalently, if distributor purchases a minimum of 250 pairs of shoes, he will

pay an amount of

Final discounted price = (1 – 0.05) x (1 – 0.10) x (1 – 0.20) x2,500

= 0.95 x 0.90 x 0.8 x 2,500
= 0.684 x 2,500
= PhP1,710 for each pair of shoes.

Total discount = 2,500 – 1710

= PhP790

Is this the same as a 35% single trade discount?

Trade Discount = 0.35x2,500

= PhP875

Note that the total trade discount availed of by the distributor did not
amount to this much, but lower. A trade discount series of 20/10/5 is
not equivalent to a 35% single trade discount!

10
To compute the equivalent single trade discount of 20/10/5,

790
Single Trade Discount Rate Equivalent =
2500

= 0.316

= 31.6%

The trade discount series 20/10/5 is only equivalent to a single

trade discount of 31.6%, not 35%.

Alternate
solution:

Single Trade Discount Rate Equivalent = 1 - (1-0.05) x (1-0.10) x (1-0.20)

= 1 - 0.95 x 0.9 x 0.8

= 1 - 0.684

= 0.316

= 31.6%

11
III. What Have I Learned

POST TEST:
SOLVING PROBLEMS INVOLVING BUYING AND SELLING PRODUCTS

Direction: Solve and answer each of the question in the problems below
and write it in your activity notebook.

1. A manufacturer sells kayaks to dealers for Php 94,500 with

discounts of 40/10/5.
a. Determine the net price of a kayak.
b. How much is the total trade discount?
c. What is the equivalent single trade discount for this
transaction?

2. What is the equivalent single trade discount for a trade discount

series of 40%,12.5%, and 2%?

3. A retail kiosk in Singapore has listed a pair of sunglasses for $136

less 30%. A department store in the shopping mall lists the same
model for $126 less 20%, less an additional 15%. What additional
rate of discount must the kiosk give to meet the department
store price?

4. A distributor was able to buy an item for PHP736 after a trade

discount series of 15/10/4. How much was the original selling
price of this item?

12
 DEPARTMENT OF EDUCATION
SCHOOLS DIVISION OF NEGROS ORIENTAL

SENEN PRISCILLO P. PAULIN, CESO V

Schools Division Superintendent

FAY C. LUAREZ, TM, Ed.D., Ph.D.

OIC - Assistant Schools Division Superintendent
Acting CID Chief

ADOLF P. AGUILAR
OIC - Assistant Schools Division Superintendent

NILITA L. RAGAY, Ed.D.

OIC - Assistant Schools Division Superintendent

ROSELA R. ABIERA
Education Program Supervisor – (LRMS)

ARNOLD R. JUNGCO
Education Program Supervisor – (SCIENCE & MATH)

MARICEL S. RASID
Librarian II (LRMDS)

ELMAR L. CABRERA
PDO II (LRMDS)

JOVIT A. TIONGCO
Writer

CHRISY BLEZEILLE L. POCONG

Lay-out Artist

_________________________________

ALPHA QA TEAM
LITTIE BETH S. BERNADEZ
MERCYDITHA D. ENOLPE
RONALD TOLENTINO
DIDITH T. YAP

BETA QA TEAM
ELIZABETH A. ALAP-AP
EPIFANIA Q. CUEVAS
NIDA BARBARA S. SUASIN
VRENDIE P. SYGACO
MELBA S. TUMARONG
HANNAHLY L. UMALI

13
 REFERENCES
Lesson 3- Buying and Selling, Part 2 PPT. n.d. Retrieved from
https://www.coursehero.com/file/26715525/Lesson-3-Buying-and-Selling-
Part-2ppt/

Lesson Exemplar in Business Mathematics. n.d. Retrieved from

https://www.academia.edu/28863227/Lesson_Exemplar_in_Business_Math
ematics

As person who is new to field of supply, html. 2014. Retrieved from

http://cmuscm.blogspot.com

Cleaves C., Hobbs M., & Noble, J. 2012. Business Math 9th Edition. New
Jersey: Pearson Education Inc., Prentice Hall.

Hummelbrunner, S. & Coombs, K. 2011. Contemporary Business Mathematics

with Canadian Applications with MyMathLab 9th Edition. Canada:

Pearson Education.

14
 SYNOPSIS AND ABOUT THE AUTHOR

This Self Learning Kit (SLK) is about solving problems involving

buying and selling products. Here, you will learn, appreciate, and
understand the use of mathematics in applying concepts of
buying and selling in a real-life situation.
As you go over with the discussion and different examples,
you will appreciate the importance of basic math as a necessary
tool for profitable business operations and accurate record
keeping.
Let us go and find enjoyment in learning this SLK and go over
the discussion and examples if you have not yet mastered a
concept.

AUTHOR

JOVIT A. TIONGCO completed his bachelor’s degree in

Business Administration Major in Management Accounting at
Foundation University. He is currently pursuing his master’s
degree in Business Administration at St. Paul University
Dumaguete City and presently the Teacher of ABM in SHS
Department of Maria Macahig National High School, Siaton
IV District. He has significantly contributed to the craft of
sports in the said school as one the winning coach in
volleyball during the municipality meet in Siaton. He is also
the Career Guidance Coordinator and GAD coordinator-SHS
of the District of Siaton IV.

15
ANSWER KEY:

16