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Buying and Selling

The document defines key terms related to buying and selling such as cost price, operating cost, selling price, profit, mark on, mark on rate, and break-even price. It also discusses concepts like markup, markdown, current increased selling price, and provides examples and exercises to demonstrate how to calculate these various metrics. The document provides the essential information for understanding the differences between costs, prices, profits, markups, and markdowns involved in the buying and selling of goods.

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Jannette Ramos
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104 views21 pages

Buying and Selling

The document defines key terms related to buying and selling such as cost price, operating cost, selling price, profit, mark on, mark on rate, and break-even price. It also discusses concepts like markup, markdown, current increased selling price, and provides examples and exercises to demonstrate how to calculate these various metrics. The document provides the essential information for understanding the differences between costs, prices, profits, markups, and markdowns involved in the buying and selling of goods.

Uploaded by

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

COST PRICE
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
OPERATING COST
 the price (per unit) incurred
relative to the production and sale
of a commodity
SELLING PRICE
 the price at which the commodity
is sold per unit
PROFIT
money earned after the cost price
and the operating costs are
accounted for after the sale of a
commodity
To compute for the SELLING PRICE:
SELLING PRICE = COST PRICE + OPERATING COST + PROFIT
S=C+E+P

where S = Selling Price


C = Cost Price
E = Operating Expenses
P = Profit
MARK ON
 the difference between the
selling price and the cost price
sometimes referred to as
MARGIN or GROSS PROFIT
MARK ON RATE
 is obtained by dividing the mark
on by the initial cost times 100 and
affix the symbol % after the
product
Mark on Rate = Mark on x 100
Initial Cost
To compute for the MARK ON:

MARK ON= SELLING PRICE – COST PRICE


MO = S – C

where MO = Mark ON
S = Selling Price
C = Cost Price
EXAMPLE

Mrs. Seville bought 100 kg of milkfish @ P120 per


kg. She desires to have 25% mark on rate of his
product.

a.What is the mark on price?


b.How much is the selling price?
c.How much is the total of possible profit?
MARK UP
the price difference between the
current increase selling price and the
previous selling price

Mark Up= CuISP-PrSP


Where CuISP- current increased in selling price
PrSP-Previous Selling Price
Current Increased Selling price
 is obtained by adding the
previous selling price and mark
up.
CuISP= PrSP + Mu
Where: CuISP- current Increased Selling Price
PrSP- Previous Selling Price
Mu- Mark up
Markup Rate
Is obtained by dividing the markup by the
previous selling price times 100. affix the
symbol “%” after the product.

MuR= Mu x 100
Pr SP
Where: MuR- mark up rate
Mu- Mark up
PrSP- Previous Selling Price
Markdown
Is obtained by getting the difference
between original selling price and the new
selling price.

Md= OSP - NSP

Where: Md- mark down


OSP- Original Selling price
NSP- New Selling Price
New Selling Price ( NSP)
the difference between original selling
price and the markdown

NSP= OSP - Md

Where: NSP- New Selling price


OSP- Original Selling price
Md- Markdown
Markdown rate
is obtained by dividing the markdown by
the original selling price times 100.

MdR= Md x 100
OSP
Where: Mdr- Markdown rate
Md- Mark down
OSP- Original 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.
• 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
Break-Even Price = Cost Price + Operating Cost
BEP = C + E

where BEP = Break-Even Price


C = Cost Price
E = Operating Expenses
EXERCISE
1. The Cellphone Company buys iPhones at PHP24000.
Expenses are set at 17% of the selling price and the
required profit is set at 20% of the selling price. During a
weekend sale, the iPhone is sold at 10% discount.
a. What is the regular selling price of the iPhone?
b. What is the sale price of the iPhone?
c. How much did The Cellphone Company gain or lose when
the iPhone was sold during the weekend sale?

2. Carlo was able to buy a pair of shoes regularly priced at


PHP3500 for only PHP2100.
a. What was the amount of the mark-down?
b. What was the rate of the mark-down?
EXERCISES
3. During a Midnight Madness Sale, a board game regularly priced
at PHP8500 was sold at 55% discount. The cost of the board
game is PHP3450 and expenses are 14% of the regular selling
price.
a.How much was the sale price of the board game?
b.What was the profit or loss made on the sale?

4. Super Mall paid PHP15000 for a set of dishes. Expenses are


18% of the selling price while the required profit is 15% of the
selling price. During an inventory sale, the set of dishes was
marked down by 30%.
a.What was the regular selling price?
b.What was the sale price?
c.What was the profit or loss?
EXERCISES
5. Appliance Store realizes a mark-up of PHP3450 in selling
TV sets. If its items are sold at a mark-up of 40% of the
selling price,
a.What is the regular selling price of the TV set?
b.What was the cost of the TV set?
c. What is the rate of mark-up based on cost for the TV set?
d. If overhead expenses are at 27% of the cost, what is the
break-even price of the TV set?
e. If the TV set is sold at PHP7500, how much profit or loss
is incurred by Appliance Store?

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