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Business Mathematics Lesson 4 Discounts

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11 views

Business Mathematics Lesson 4 Discounts

Uploaded by

Miel Toni
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Differentiate Mark-Up from Margin

In the previous lesson, we define Mark-Up as the amount by which cost of a


product is increased in order to derive the selling price, on the other hand,
Margin which is also known as gross margin is Revenue or Sales minus cost
of goods sold.

Margin = Revenue or Sales – Cost of goods sold.

This is important in sales because it shows whether the said sales is sufficient
to cover the costs. And to get the Margin percentage, we calculated margin
amount divided by sales or revenue.

Margin % = Margin amount Sales or Revenue multiply by


100%.
For example: A pilot pen cost for Php30.00 and sold for Php50.00. How much is the
margin amount and its percentage?
Solution:
Margin = Revenue/Sales – Cost of goods sold
= 50 - 30 = Php20.
Margin % = Margin amount ÷ Sales x 100%
= 20 ÷ 50 = 0.40 x100%
= 40%.
From the same example, a mark-up of Php20.00 from the Php30.00 yields the
Php50.00 price.
We get; Mark-Up = Sales – Cost
= Php50 - 30
= Php20.
Mark-Up% = Mark-Up amount ÷ Cost x 100%
= Php20 ÷ 30 x 100%
= 66.67%
Single Trade Discount and Discount
Series
A single trade discount is a discount that is given to a customer or the
wholesaler when the customer/wholesaler buys a product. It is a percentage
related problem. For example, if you say that you will give 50% off to the price of
each dozen of pencil you sell, you are giving a single trade discount.

The formula used to solve for the single trade discount is given by:
Trade Discount = Original Price or List Price X Discount
Rate.
Form this equation we also come up with:

List price = Trade Discount ÷ Discount Rate.

Discount Rate % = Trade Discount ÷ Original price or List price X 100%.


To compute for the Net Price, we just subtract the Trade discount from the
list price.
Net price = List Price or Original price – Trade discount.
For examples:
1. Find the trade discount for Samsung A5 phone that list for Php14,500 and
has a trade discount of 10%.
Solution:
Trade Discount = List Price X Discount rate
= Php14,500 X 0.10
= Php1,450.00
2. Find the net price of a camera that lists for Php320 and has a trade
discount of 10%.
Solution:
Trade Discount = List Price X Discount rate
= Php320 X 0.10
= Php32.00
Net price = List price – Trade
discount
= Php320 – 32
= Php288.00
3. An air conditioning unit, listed at Php30,000 with a discount of Php6,000 is
offered to a customer. Determine the discount rate.

Solution:
Discount rate = Trade discount ÷ List price x 100%
= Php6,000 ÷ 30,000
= 0.2 x 100%
= 20%
Discount Series is a type of discount wherein through a combination of
conditions. These are given to customers in order to encourage them to buy in
volume.
For example:
1. Suppose a discount series of 20%,10%, and 5% is given to an item with a list
price of Php400. How much is the net price?

Solution:
a. Discount = Php400 x 20% = Php80
Price = Php400 – Php80 = Php320
b. Discount = Php320 x 10%
= Php32 Price =
Php320 – Php32
c. Discount = = Php288
Php288 x 5% = Php14.40
Net Price = Php288 – Php14.40
= Php273.60

Php273.60 will be the net


price
Using the Single Discount Rate (Equivalent of the Discount
Rates)
1. What single discount is equivalent to two successive discounts of 20%
and 30%?
Percent given: 20% and 30%
Complement of percent given: 80% and 70% respectively
Multiply: 0.80(0.70) = 0.0.56

Take the complement percent: 1-0.56 = 0.44 or 44%

Hence the two successive discounts of 20% and 30% is equivalent


to 44%

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