JEIRICHO DENNIS V.

LIPURA 12-TENNESINE
What I Know
Let us see what you already know about forecasting revenues and
costs.
Answer the questions below.

Write True if the statement is correct & write False if you think the answer
is not correct.
False . The gross profit rate of the entrepreneurial venture is computed by
dividing the cost of goods sold by net sales.
True 2. The gross profit rate provides information on the cost ratio of the
business.
False 3. In evaluating the profitability of the entrepreneurial venture, the
evaluation must focus on the information reflected on the face of the
balance sheet.
False 4. The operating profit margin rate indicates information on the
percentage of operating expenses on the net sales.
True 5. Mr. Q is a practicing Doctor of Medicine. During the month of March
2019 he received Professional Fees amounting to P 1,000,000 and
total expenses of P250,000. The net income of Mr. Q is P 750,000.
False 6. Profit is the money received from customer in exchange of
products given to customer.
False 7. The gross profit rate of the entrepreneurial venture is computed by
dividing the cost of goods sold by net sales.
True 8. The gross profit rate provides information on the cost ratio of
business.
False 9. One of the objectives in evaluating the gross profit rate of the
business is to determine whether the amount of the gross
profit is sufficient to cover the operating expenses.
False 10. The operating profit margin rate indicates information on the
percentage of operating expenses to net sales.

This study source was downloaded by 100000817665662 from CourseHero.com on 12-23-2021 19:52:14 GMT -06:00

https://www.coursehero.com/file/92508112/Lipura-Ts-Module8Entrepdocx/
 False 11 The government is not interested in financial statements since it is
not a party to any of the transactions of the business.
True 12. The net profit margin rate presents the general perspective of the
operating performance of the business.
False 13. The amount of income per peso investment can be determined by
computing the net profit margin rate.
True 14. In normal situation, it is favorable for the business to have high
inventory
False 15. Preparation & presentation of the financial statements of the
entity is the primary responsibility of an accountant.
What’s New
Activity 1
Read and understand the given problem.

Rodrigo is engaged in a buy-and sell business of perfumes. He bought

10 boxes of perfumes. Each box costs 12,000.00 and contains a dozen of
perfume bottles. He is planning to sell one perfume bottle at P1,500. What
is his expected profit on the 10 boxes of perfumes?
The ultimate goal of any business whether a retail or wholesale is to
earn a profit. Getting the difference between the amount of money earned
from the selling 10 boxes containing a dozen of perfume bottles and the
cost of those 10 boxes gives the profit.

In the example that I gave, answer the following questions:

1. How much does Rodrigo earned profit? 60,000 Php
2. Is it good to engage in a business? Yes or No? Yes
3. What do you think of Rodrigo’s business? Is it good for a beginner? I think
no. Although retail selling is much effective for beginners but the specific
business is not recommended for me for it will cost a lot of capital and
perfume is not a necessities which reduces the chances of good market.

This study source was downloaded by 100000817665662 from CourseHero.com on 12-23-2021 19:52:14 GMT -06:00

https://www.coursehero.com/file/92508112/Lipura-Ts-Module8Entrepdocx/
 What’s More

Compute the Gross Profit

Answer the given problem.

1. Annie bought one dozen smartphones for P200,000.00 with a
discount of 5%. She sold half dozen at a price of P18,000.00 per unit.
However, a new model of smartphone became available in the
market, so she sold the remaining half dozen @ P12,000.00 each
unit. What was her profit or loss?

Compute the following requirements:

a. Gross profit rate
108,000+72,000= 180,000
180,000-190,000=-10,000
-10,000/190,000= -5.2%
b. Operating profit margin rate
0%
c. Net profit margin rate
0%
d. Return on Investment
0%

Now ask yourself the following questions:

1. Is creativity present in the operation of ordinary small

businesses along the streets and highways and in your
neighborhood? Why do you say so?

This study source was downloaded by 100000817665662 from CourseHero.com on 12-23-2021 19:52:14 GMT -06:00

https://www.coursehero.com/file/92508112/Lipura-Ts-Module8Entrepdocx/
 No, They are copied from the basic mode of entrepreneurship that is
started years ago. They were not creative because they didn’t make
any innovations or mix it with another business mode

2. Will you consider the daily business practices of the small

owner within the concept of entrepreneurship? Why?

Yes, for the old definition of entrepreneurship is building

businesses however it would not fit to the more modern concept
of entrepreneurship which is solving the big problems of the
world.

What I Can Do

Conduct an interview of at least three (3) successful business people in

your locality, use the following questions as your guidelines:

1. What made him motivate to start a business?

_______________________________________________________
_______________________________________________________
_______________________________________________________ 2. What
is the nature of his business?
_______________________________________________________
_______________________________________________________
_______________________________________________________

3. How much capital involved?

_______________________________________________________
_______________________________________________________
_______________________________________________________ 4. How
many years of existence?

This study source was downloaded by 100000817665662 from CourseHero.com on 12-23-2021 19:52:14 GMT -06:00

https://www.coursehero.com/file/92508112/Lipura-Ts-Module8Entrepdocx/
 _______________________________________________________
_______________________________________________________
_______________________________________________________
5. Did you consider the population of the community?
________________________________________________________
_______________________________________________________
_______________________________________________________

6. How much gross profit did you earn for the first year of operation?
________________________________________________________
_______________________________________________________
_______________________________________________________

Assessment

How did you understand the lessons that you have studied in this
module? Answer the following questions.

Write True if the statement is correct & write False if you think the answer
is not correct.
False 1. The gross profit rate of the entrepreneurial venture is computed by
dividing the cost of goods sold by net sales.
True 2. The gross profit rate provides information on the cost ratio of the
business.
False 3. In evaluating the profitability of the entrepreneurial venture, the
evaluation must focus on the information reflected on the face of the
balance sheet.
False 4. The operating profit margin rate indicates information on the
percentage of operating expenses on the net sales.

This study source was downloaded by 100000817665662 from CourseHero.com on 12-23-2021 19:52:14 GMT -06:00

https://www.coursehero.com/file/92508112/Lipura-Ts-Module8Entrepdocx/
 True 5. Mr. Q is a practicing Doctor of Medicine. During the month of March
2019 he received Professional Fees amounting to P 1,000,000 and
total expenses of P250,000. The net income of Mr. Q is P 750,000.
False 6. Profit is the money received from customer in exchange of
products given to customer.
False 7. The gross profit rate of the entrepreneurial venture is computed by
dividing the cost of goods sold by net sales.
True 8. The gross profit rate provides information on the cost ratio of
business.
False 9. One of the objectives in evaluating the gross profit rate of the
business is to determine whether the amount of the gross
profit is sufficient to cover the operating expenses.
False 10. The operating profit margin rate indicates information on the
percentage of operating expenses to net sales.
False 11. The government is not interested in financial statements since it
is not a party to any of the transactions of the business.
True 12. The net profit margin rate presents the general perspective of the
operating performance of the business.
False 13. The amount of income per peso investment can be determined by
computing the net profit margin rate.
True 14. In normal situation, it is favorable for the business to have high
inventory
False 15. Preparation & presentation of the financial statements of the
entity is the primary responsibility of an accountant.

Additional Activities

After learning how to compute the gross profit at least you have
learned now how to do it by your own. Solve and compute the following:

This study source was downloaded by 100000817665662 from CourseHero.com on 12-23-2021 19:52:14 GMT -06:00

https://www.coursehero.com/file/92508112/Lipura-Ts-Module8Entrepdocx/
 1. A watch store owner decided to offer 20% discount for a particular
brand of watch that sells at P35,000.00. By doing so, his average
sales increased from 5 watches to 12 watches a day. If he bought one
watch at a price of P22,000.00 from the supplier, by how much was
his daily profit increased or decreased by offering such discount on
the watch?
35, 000 *0.80= 28,000 35, 000
28,000 * 12= 336,000 35,
000*5=175,000
12* 22,000= 264 000 5* 22 000=110,000
336000 -264 000= 72,000 Php 175,000-
110,000= 65, 000 Php
In conclusion, if the watch was put on discount it would give him a
7,000 Php profit than his previous sales

2. Michelle went to Baguio and bought 20 jars of strawberry jam for

P3,500.00 with 1 5% discount. When she got back to Manila, she sold
10 of the jars for a total of P1,800.00and the rest as P185.00 each.
How much profit did Michelle again?

3500*0.85= 2975

1,800 + 185* 10

1800+ 1850= 3650

3650- 2975= 675 Php

Michelle gained 675 Php of clean profit

This study source was downloaded by 100000817665662 from CourseHero.com on 12-23-2021 19:52:14 GMT -06:00

https://www.coursehero.com/file/92508112/Lipura-Ts-Module8Entrepdocx/
Powered by TCPDF (www.tcpdf.org)