Business Mathematics

Governor Pack Road, Baguio City, Philippines 2600

Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: Grade 11- ABM
Email: [email protected]; Website: www.uc-bcf.edu.ph

MODULE 4 – BUS MATH Subject Teacher: Kenny Jones A. Amlos

Discounts, profit and loss, and break even

Learning Objectives:
At the end of this module, student must be able to:
a. compute single trade discounts and discount series;
b. differentiate profit from loss;
c. calculate profit or loss; and
d. determine break-even points.

As a buyer, one of the words we love to hear is

discount. Not only because it reduces what we pay in
exchange to a product or service but because it also
helps us save some money.

It’s simply up to you as a buyer to take

advantage of it or not. but why do sellers offer
discounts? Does this give them an advantage? Does it
not cause them to lose profit? How do they compute
for discounts?

In this module, these questions will be answered.

DISCOUNTS
To encourage customers to purchase products, companies often offer discounts on the prices.
A discount is a percentage that is deduced from the original price. This is similar to markdown. There
are two basic types of discounts that companies offer. The first type is the single trade discount and
the discount series.

1. Single Trade Discount

A single trade discount is a one-time discount that is given to customers when they buy a
product or service. To illustrate how this type of discount is applied, consider the situation below.

Suppose a supplier of slippers gives a retailer a 30% discount on all purchased products worth
₱50,000. We know that 30% of ₱50,000 is ₱15,000. In this context, the original price is ₱50,000. The
discount rate is 30%. The discount, which is a single trade discount, is ₱15,000. To get the selling price,
we need to deduct the discount (₱15,000) from the original price (₱50,000); hence, the selling price
is ₱35,000. Another way to compute is by simply multiplying 70% to the original price as the original
price is 100% but is discounted by 30%. The formulas in this type of transaction are summarized
below.

Formulas in calculating the discount and the selling price

If an item has an original price Mo and is sold at a selling price S, then the discount D and
the discount rate r can be calculated using the formulas below.

D = r x Mo

S = Mo – D or S = Mo (1 – r)

As you can notice, formulas for discounts seem to use the same variables used in computing
for markup, markon, markdown, and gross margin. That is because these variable represent
the same values like original price, selling price, and others.

You may use other variables as long as they represent the same thing.

Page 1 of 11
 Business Mathematics
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: Grade 11- ABM
Email: [email protected]; Website: www.uc-bcf.edu.ph

MODULE 4 – BUS MATH Subject Teacher: Kenny Jones A. Amlos

We can derive two other formulas from D = r x M o. When r is missing, we can use the following
formula:
𝐷
r=
Mo
When Mo is missing, the formula is:
𝐷
Mo =
r
We can also consider the following techniques when determining which formula should be used
when one of the variables is missing:

When we need to get the When we need to get the When we need to get the
discount, cover D. discount rate, cover r. original price, cover Mo.

D = r x Mo r=
𝐷
Mo =
𝐷
Mo r

See how these techniques can be applied in the succeeding examples.

EXAMPLE 1. Determining the discount.

A refrigerator that originally costs ₱12,990 is on sale at 20% off. If you buy it, how much will you
save?

SOLUTIONS AND ANSWERS

The given information are Mo = ₱12,990 and r = 20% or 0.20. The discount D can be computed
as follows:

D = r x Mo
D = 0.20 x 12,990
D = ₱2,598

Therefore, if you buy the refrigerator, you will save ₱2,598.

EXAMPLE 2. Determining the original price.

If Zilong saved ₱4,200 from purchasing a flat-screen TV set that is on sale at 7% off, what was the
original price of that TV set?

SOLUTIONS AND ANSWERS

The given information are D = ₱4,200and r = 7% or 0.07. The original price M o can be
computed as follows:
𝐷
Mo =
r
4,200
Mo =
.07
Mo = ₱60,000
Therefore, the original price of the TV set bought by Zilong was ₱60,000.

Page 2 of 11
 Business Mathematics
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: Grade 11- ABM
Email: [email protected]; Website: www.uc-bcf.edu.ph

MODULE 4 – BUS MATH Subject Teacher: Kenny Jones A. Amlos

EXAMPLE 3. Determining the discount and the selling price.

A DVD, which originally costs ₱600, is marked 25% off. How much is the discount? What is its
selling price?

SOLUTIONS AND ANSWERS

The given information are Mo = ₱600 and r = 25% or 0.25. The discount D can be computed as
follows:

D = r x Mo
D = 0.25 x 600
D = ₱150

S = Mo – D
S = 600 – 150
S = ₱450

Therefore, the discount is P150 and the selling price is ₱450.

Using the formulas on discounts that we already know, we can derive another important
formula. By substituting the value of D from D = r x M o into Mo – D = S, so we can obtain the following:

Mo – (r x Mo) = S
Solving for Mo, we have:
Mo – (r x Mo) = S
Mo (1- r ) = S
𝑆
Mo =
1−r

This formula is used in getting the original price when the selling price and the discount rate are
given.

EXAMPLE 4. Determining the original price.

During a sale, a desk is being sold for ₱2,142. This price was the result when a 32% discount was
applied on the original price. What is the original price?

SOLUTIONS AND ANSWERS

The given information are S = ₱2,142 and r = 32% or 0.32. The original price Mo can be
computed as follows:
𝑆
Mo =
1−r
2,142
Mo =
1−0.32

Mo = ₱3,150
Therefore, the original price of the desk is ₱3,150.

Page 3 of 11
 Business Mathematics
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: Grade 11- ABM
Email: [email protected]; Website: www.uc-bcf.edu.ph

MODULE 4 – BUS MATH Subject Teacher: Kenny Jones A. Amlos

2. Discount Series
The second type of discount is the discount series. A discount series means that multiple
discounts are applied successively on the same item. To illustrate how it is computed, consider the
situation below.
Suppose another supplier of slippers offers the retailer a 20/12 discount series, which means that
the retailer gets a 20% discount on the original amount, and an additional 12% discount on the
resulting discounted amount. It is important to note that a 20/12 discount series is not the same as
32% single trade discount. Let us examine the difference between the two discounts. If, for example,
the retailer will purchase ₱50,000 worth of slippers, the selling prices when a 32% single trade
discount and a 20/12 discount series are applied can be computed as shown in the succeeding
table:

Selling Price (S) when a 32% single trade Selling Price (S) when a 20/12 discount series is
discount is applied applied
Given: Given:
M0 = ₱50,000 ; r = 32% M0 = ₱50,000 ; r1 = 20% ; r2 = 12%

Solution: Solution:
S = Mo (1 – r) To get the first discounted price (S1), apply the
S = 50,000 (1 – 0.32) 20% discount (r 1) on M0 = ₱50,000; that is,
S = ₱34,000 S1 = Mo (1 – r1)
S1 = 50,000 (1 – 0.20)
Therefore, the selling price is ₱34,000. S1 = ₱40,000

To get the second discounted price (S 2), which is

also the final selling price, use S1 as the new Mo
and apply the additional 12% discount (r 2); that
is,
S2 = Mo (1 – r2)
S2 = 40,000 (1 – 0.12)
S2 = ₱35,200

Therefore, the final selling price is ₱35,200.

As you can see above, the selling prices are not equal. We have also verified that the 32% single
trade discount is more than the 20/12 discount series.

Knowing the different result of the two discounts will help you determine which contract or
transaction is more advantageous to you as buyer and as a seller.

Also remember that a discount series may have unlimited set of numbers or discounts. For
example, 20/10/5; 15/20/10/5 ; and so on.

EXAMPLE 5. Determining the total discount in a discount series.

A store created by Kagura offers a discount series of 20/15/5 for any orders above ₱9,000. Suppose you
ordered 40 umbrellas with a marked price of ₱300 each. Find the following:
a. The total discounted price of the order, and
b. The total discount

Page 4 of 11
 Business Mathematics
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: Grade 11- ABM
Email: [email protected]; Website: www.uc-bcf.edu.ph

MODULE 4 – BUS MATH Subject Teacher: Kenny Jones A. Amlos

SOLUTIONS AND ANSWERS

a. The total price of 40 umbrellas at ₱300 each is ₱12,000. Since the total amount of the
order exceeds ₱9,000, the 20/15/5 discount series can be applied.

For the first discounted price S1, use r1 = 20% and Mo = ₱12,000; hence,

S1 =Mo (1 – r1)

S1 =12,000 (1 – 0.20)

S1 = ₱9,600

For the second discounted price S2, use r2 = 15% and Mo = ₱9,600

S2 =Mo (1 – r2)

S2 = 9,600 (1 – 0.15)

S2 = ₱8,160

For the third discounted price S3, use r3 = 5% and Mo = ₱8,160

S3 =Mo (1 – r3)

S3 = 8,160 (1 – 0.15)

S3 = ₱7,752

Therefore, the total discounted price for the 40 umbrellas is ₱7,752

b. The total discount is:

12,000 – 7,752 = ₱4,248

PROFIT, LOSS, and BREAK-EVEN

Businesses are typically established in order to gain a profit, which is often referred to as the
bottom line of every business. There are two types of profit – gross profit and net profit. You will study
both types of profit in more advanced business courses. In this module, however, we will only be
dealing with net profit; hence, whenever we mention “profit” in different context, take note that we
are only referring to the “net profit”.

The term “profit” is usually associated with the terms revenue and expenses. We can define
revenue (which is also commonly referred to as income) as the amount of money that a company
receives for its goods and/or services. On the other hand, the cost of expenses is the amount of money
that the company spends to either produce its goods or perform its services. The difference between
the revenue and the cost of expenses is called profit, which is also usually referred to as the net income
or net earnings. In other words, the profit is the amount of money that is left over from a company’s
revenue after it pays for its expenses in doing business.

The formula in computing the profit or net income is shown below.

Formulas in getting the profit

The profit P is calculated by subtracting the total expenses E from the total revenue R. in
symbols,

P=R-E

Page 5 of 11
 Business Mathematics
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: Grade 11- ABM
Email: [email protected]; Website: www.uc-bcf.edu.ph

MODULE 4 – BUS MATH Subject Teacher: Kenny Jones A. Amlos

EXAMPLE 1. Determining the profit.

Akai made 100 pieces of doughnuts and sold them at ₱6 each. It costs him ₱4 to make one
piece of doughnut. If all doughnuts will be sold, how much will be his profit?

SOLUTIONS AND ANSWERS

The total expenses in making 100 doughnuts is:

E = (4)(100)

E = ₱400

The total income or revenue is:

R = (6)(100)

R = ₱600

The profit can be computed as follows:

P=R–E

P = 600 – 400

P = ₱200

Therefore, Akai’s profit is ₱200.

In any business, it is inevitable that sometimes a company earns less than what is spent; that is,
its revenue R is less than its expenses E. in this case, if we compute for the profit using the formula
P = R – E, we will obtain a negative value. The negative value indicates a loss. This scenario is
demonstrated in the next example.

EXAMPLE 2. Determining the Loss.

On a certain day, Majinbuu made 100 pieces of pancake to sell. It costs him ₱4.50 to make one
piece of pancake. He was able to sell only 72 pieces at ₱6 each. How much was his loss?

SOLUTIONS AND ANSWERS

Majinbuu’s total cost of expenses is:

E = (4.50)(100)
E = ₱450
He sold 72 pieces at P6 each; so his total revenue is:

R = (6)(72)
R = ₱432
The results show that the total cos of expenses is higher than the total revenue, which leads to
a negative profit or loss. Here’s how to compute the Loss:

P=R–E
P = 432 – 450
P = (₱18)

*take note that “()” and “-“ both means loss.

Therefore, Majinbuu’s loss is ₱18.

Page 6 of 11
 Business Mathematics
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: Grade 11- ABM
Email: [email protected]; Website: www.uc-bcf.edu.ph

MODULE 4 – BUS MATH Subject Teacher: Kenny Jones A. Amlos

To avoid or offset, Majinbuu may sell the remaining doughnuts at a lower price or do certain
promotional strategies like a “buy-1-take-1” offer. If he will be able to earn exactly ₱18 (which is the
amount of the loss) from any of those activities, then the difference between the total revenue and
the total expenses will become zero. When that happens, we can say that he was already able to
break-even.

In business context, the break-even point is the point when the total cost of expenses and the
total revenues are equal. In other words, it is the point when there is neither a profit now a loss. To
illustrate this concept, refer to the following figure.

Let us analyze this graph. In most cases, the revenue R and the cost of expenses E depend on
the quantity of products (we denote such quantity as x). This means that R and E are functions of x,
and we can write such functions as R(x) and E(x), respectively. This also means that R(x) and E(x) are
your total revenue and total expenses, respectively. We can see from the graph that as x increases,
both R(x) and E(x) also increase. Moreover, at a certain value of x, the two functions intersect. This point
of intersection is the break-even point. The break-even point identifies the quantity of a product for
which the revenue and the cost of expenses are equal. Study how the break-even point is calculated
in the next example.

EXAMPLE 3. Determining the break-even point.

It costs Mario ₱4 to make a doughnut. He made 100 pieces and he plans to sell them at ₱5
each. How many pieces must he be able to sell in order to reach the break-even point?

SOLUTIONS AND ANSWERS

Since he made 100 pieces of doughnuts and spent ₱4 on each piece, the cost of expenses
is:

E = (4)(100)
E = ₱400

It was also given that he will sell the doughnuts at P5 each. So is he sells x pieces of doughnuts,
the revenue is:
R = 5x

At the break-even point, the revenue and the cost of expenses are equal; that is R = E. so from
the two equations above, we can form the following equation, and then we solve for x:
R=E
5x = 400
x = 80 pieces

This means that Mario needs to sell 80 pieces of doughnuts to reach the break-even point. Any
number lower than 80 will result to a loss and anything above 80 will result to profit.

Page 7 of 11
 Business Mathematics
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: Grade 11- ABM
Email: [email protected]; Website: www.uc-bcf.edu.ph

MODULE 4 – BUS MATH Subject Teacher: Kenny Jones A. Amlos

We can also illustrate the break-even point in the previous example by using a graph. Based on
the given information in the problem, the two functions are:
E(x) = 400; and R(x) = 5x

As you will see on the graph below the functions intersect at (80,400), which is the break-even
point. This means that when 80 pieces of doughnuts are sold, the cost of expenses and the revenue
are both equal to P400.

Now let us recall and apply some basic algebra techniques in solving problems involving profit,
revenue, and expenses.

EXAMPLE 4. Forming an expression for the total cost of expenses.

Pehn, owner of Pehn Pens, manufactures pens for a living. It costs him ₱22.50 to produce each
pen. To reach his target market, he also spends ₱27,000 for advertisements. Write an expression that
represents the total cost of his expenses.

SOLUTIONS AND ANSWERS

The total cost of Pehn’s expenses is the sum of the cost of producing the pens (or the
production cost) and the cost of the advertisements. Suppose we let x as the number of pens
that he produces. Since the cost of producing each pen is ₱22.50, the production cost may
be represented as 22.50x.

On the other hand, the cost of advertisements is ₱27,000, which is constant. Hence, if we let E
as the total cost of expenses, we can form the following expression:

E = 22.50x + 27,000

Using the formula above, if Pehn produced 1,000 units of pen, then his total expense will be
computed as:
E = 22.50(1,000) + 27,000
E = 22,500 + 27,000
E = ₱49,500

Take note that in the formula P = R – E, R and E are total revenues and total expenses,
respectively. This means that if there are other additional income or revenue from the same product
or service then we must include it in the total revenue, same with expenses; if there are additional
expenses for the same product or service, then we must add them all.

Page 8 of 11
 Business Mathematics
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: Grade 11- ABM
Email: [email protected]; Website: www.uc-bcf.edu.ph

MODULE 4 – BUS MATH Subject Teacher: Kenny Jones A. Amlos

EXAMPLE 5. Forming an expression for the total revenue.

Consider the information given in example 4. Suppose Pehn sells x pieces of pens at ₱30 each.
Write an expression that represents the total revenue that Pehn earns.

SOLUTIONS AND ANSWERS

Let R represent the total revenue that Pehn earns from selling x pieces of pens. Since each
pen is sold at ₱30 each, the expression for his total revenue is:

R = 30x

EXAMPLE 6. Determining the break-even point

Gustoh Kho plans to sell siomai around his neighborhood. He estimates that it will cost him ₱2.50
to make a piece of siomai. He also plans to buy a cart worth ₱2,700. Suppose he will sell the siomai at
₱4 each.
1. Write the equations that represent the total revenue and the total cost of expenses.
2. Using the equations, determine the break-even point.
3. Graph each equation and verify the result that you got in item 2.

SOLUTIONS AND ANSWERS

1. Since it costs ₱2.50 to make each piece of siomai, the production cost for x pieces of
siomai is represented by 2.50x. The cost of the cart is ₱2,700. The total cost of expenses is
the sum of the production cost and the cost of the cart. If we let E as the total cost of
expenses, then we have the following equation:
E = 2.50x + 2,700

On the other hand, if we let R as the total revenue from selling x pieces of siomai at ₱4 each,
then we have the following equation:
R = 4x

2. We can solve for the break-even point algebraically. At the break-even point, we know that
the revenue and the cost of expenses are equal: that is, R = E. This means that we can
equate the expressions for E and R that we obtained in item 1. Then we solve for x. Hence,
we have the following:
R=E
4x = 2.50x + 2,700
4x – 2.50x = 2,700
1.50x = 2,700
x = 1,800 pieces

If we substitute x = 1,800 into the equations for E and R, we will have:

E = 2.50x + 2,700
E = 2.50(1,800) + 2,700
E = 4,500 + 2,700
E = ₱7,200

R = 4x
R = 4(1,800)
R = ₱7,200
… continued to the next page

Page 9 of 11
 Business Mathematics
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: Grade 11- ABM
Email: [email protected]; Website: www.uc-bcf.edu.ph

MODULE 4 – BUS MATH Subject Teacher: Kenny Jones A. Amlos

SOLUTIONS AND ANSWERS

… continued from the previous page

The resulting values mean that if Gustoh Kho sells 1,800 pieces of siomai, the cost of expenses
and the revenue are both equa to ₱7,200. This is the break-even point.

3. If we graph the two equations on the same coordinate plane, the following will be the result:

As we can observe on the graph, the two equations intersect at the point (1,800, 7,200).
Hence, the break-even point that we obtained in item 2 is correct.

The concepts that we have discussed so far can help us in making decisions in personal and
business contexts such as when we need to determine how to earn more profit and avoid losses. Study
the next example.

EXAMPLE 7. Problem solving involving profit, revenue, and expenses.

Boy Logro sells burgers for a living. The cost for making each burger is ₱60. He wants to know the
relationship between the selling price that he should set and the number of burgers that he needs to
sell in order to earn a certain profit.
1. Write an equation that relates his desired profit to the selling price of each burger and the
number of burgers that he needs to sell.
2. If he sells 100 burgers and his desired profit is ₱600, what should be the selling price of each
burger?
3. If the selling price of each burger is P80 and his desired profit is ₱1,000, how many burgers should
he sell?

SOLUTIONS AND ANSWERS

Suppose we let x as the number of burgers that Boy Logro needs to sell, and y as the selling
price of each burger.

1. The cost for making each burger is ₱60; so to make x burgers, the cost of expenses E is:
E = 60x

Also, at a selling price of y pesos per burger, his revenue R when he sells x burgers is:
R = xy

… continued to the next page

Page 10 of 11
 Business Mathematics
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: Grade 11- ABM
Email: [email protected]; Website: www.uc-bcf.edu.ph

MODULE 4 – BUS MATH Subject Teacher: Kenny Jones A. Amlos

SOLUTIONS AND ANSWERS

… continued from the previous page

Recall the following formula that involves profit, revenue, and expenses:
P=R–E

By substituting the equivalent expressions for E and R that we have obtained the equation
above will become:
P = xy – 60x

We now have a formula that relates his desired profit (P) to the selling price (y) of each
burger and the number of burgers (x) that he needs to sell.

2. It was given that x = 100 and P = ₱600. By substituting these values to the equation that we
obtained in item 1, and the solving for y (which is the selling price of each burger), we will
have the following:
P = xy – 60x
600 = 100y – 60(100)
600 = 100y – 6,000
600 + 6,000 = 100y
6,600 = 100y
y = ₱66

Thus, he should set the selling price at ₱66 per burger.

3. It was given that y = ₱80 and P = ₱1,000. By substituting these values into the equation that
we obtained in item 1, and then solving for x (which is the number of burgers), we will have
the following:
P = xy – 60x
1,000 = 80x – 60x
1,000 = 20x
x = 50 burgers

Therefore, he should sell 50 burgers.

References:
 BAL 650.0151 Si79 2016 Sirug, Winston S. (2016), Business mathematics for senior high school -
ABM specialized subject: a comprehensive approach, Mindshaper Co., Inc., Intramuros,
Manila
 Jerico, B. B., & Jeffrey, S. M. (2017). Business Mathematics for Senior High School. Quezon City:
C & E Publishing.

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