Module 3 Buying and Selling For Students Copy 1
Module 3 Buying and Selling For Students Copy 1
Module 3 Buying and Selling For Students Copy 1
MARKUP
AND
MARKDOW
N
MARKON or INITIAL
MARKUP
Difference between the original selling price and the cost of an item.
SELLING PRICE
Market price that a product will be sold.
COST
Actual price that the product was bought from a manufacturer or
wholesaler
MARKUP
Increase in the original selling price.
MARKDOWN
Reduction in the original selling price.
MARKON or Initial Markup FORMULAS
Markon (Initial Markup)= Selling Price -
Cost
Solution:
Markdown = Original Selling Price – Markdown Price
= ₱1,290 – ₱999 = ₱291
Markdown Rate = Markdown ÷Original Selling Price
= ₱291 ÷ ₱1,290
= 0.2256 or 22.56%
Example 17
If men’s accessories are being sold for P
990 , what would be the new selling price if
you decided to give a markdown rate of
20%?
Solution:
Markdown = Original Selling Price x Markdown Rate
= ₱990 x 0.20 = ₱198
New Selling Price = Original Selling Price – Markdown
= ₱990 – ₱198 = ₱792
MARKUP VERSUS
MARGIN
Markup is the amount added to the cost to obtain
the selling price.
Margin (gross margin or gross profit) is the selling
price minus the cost of goods.
Markup is a percentage of cost
Margin is a percentage of sales
DISCOUNT
Amount deducted
from the selling price
of a product or service.
TYPES OF DISCOUNTS
TRADE DISCOUNT
offered by a manufacturer or wholesaler to encourage
resellers to purchase a product. It is usually stated in a specific
amount or percentage discount.
CASH DISCOUNT
given to persuade customers to pay in cash immediately or
within a specified time.
TRADE DISCOUNT
Applied on the list or price tag.