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

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

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.

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.

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
EXPENSE
S
banana (saba)
sticks
sugar
cooking oil
space for selling
cook's salary
vendor's salary
tissue
wrapper for take-out
orders
LPG

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

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

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

PRE-ACTIVITY:
Now it is time to account for the other
additional expenses.
OTHER
EXPENSES
COS
T
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

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?

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.

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

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.

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

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

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

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

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

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

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.

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%

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.

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

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.

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

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.)

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?

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

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%

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:

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

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.

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

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

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.

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

REMEMBER THAT RATE
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.

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.

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.

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.

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.

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.

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

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