Business Mathematics: Buying and Selling
5 Questions
0 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to Lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is a mark up?

A mark up is the amount of money added to the cost of a product to cover operating expenses and provide a profit for the business.

What is the formula for calculating a mark up?

MU = SP - CP

What is a mark down rate?

A mark down rate is a percentage of the original selling price that is reduced to determine the sale price.

What is the difference between a mark up and a margin?

<p>A mark up is the amount of money added to the cost of a product to determine the selling price, while a margin is the profit that is made on a product.</p> Signup and view all the answers

Which of the following is NOT a reason for a mark down?

<p>To increase the selling price. (A)</p> Signup and view all the answers

Flashcards

Mark Up (MU)

The amount of money added to the cost of a product to cover operating expenses and make a profit.

Selling Price (SP)

The price at which an item is sold.

Cost of Product (CP)

The total cost involved in producing a product, including all expenses.

Mark Up Rate (MUR)

A percentage of the cost added to determine the selling price.

Signup and view all the flashcards

Mark Down (MD)

The reduction in the original selling price of a product.

Signup and view all the flashcards

Original Selling Price (OSP)

The initial price of an item before any discounts.

Signup and view all the flashcards

Reduced Selling Price (RSP)

The discounted price of an item after a mark down.

Signup and view all the flashcards

Mark Down Rate (MDR)

The percentage decrease from the original selling price.

Signup and view all the flashcards

Mark On (MO)

An increase in the selling price of a product, often due to high demand.

Signup and view all the flashcards

Increased Selling Price (ISP)

The new price of an item after a price increase.

Signup and view all the flashcards

Previous Selling Price (PSP)

The original selling price of an item before the increase.

Signup and view all the flashcards

Gross Margin

The difference between the selling price and the cost of the product.

Signup and view all the flashcards

Margin

Difference between selling price and cost.

Signup and view all the flashcards

Calculation of Selling Price

Determine the final selling price based on cost and margin.

Signup and view all the flashcards

Profit

Excess revenue over cost.

Signup and view all the flashcards

Cost

Amount spent on producing a product.

Signup and view all the flashcards

Sale

The transfer of products for money.

Signup and view all the flashcards

Demand

Customer desire for a product.

Signup and view all the flashcards

Supply

Quantity of product available.

Signup and view all the flashcards

Competition

Other sellers of similar products.

Signup and view all the flashcards

Inventory

Stored goods for sale.

Signup and view all the flashcards

Market

Place where goods are sold.

Signup and view all the flashcards

Study Notes

Business Mathematics: Buying and Selling

  • Mark Up (MU): The amount of money added to the cost of a product to cover operating expenses and yield a profit for the business. It's the difference between the selling price and the cost price. Also referred to as margin or profit.

  • Selling Price (SP): The price at which the item is actually sold.

  • Cost Price (CP): The price inclusive of all expenses in producing the product.

  • Formula:

    • MU = SP - CP
    • SP = MU + CP
    • CP = SP - MU

Mark Up Rate (MUR)

  • Definition: A percentage of the cost added to determine the selling price.

  • Formula (Based on Cost):

    • MU = MUR × CP
    • MUR = (MU/CP) × 100%

  • Formula (Based on Selling Price):

    • MU = MUR × SP
    • MUR = (MU/SP) × 100%

Mark Down (MD)

  • Definition: Reducing the original selling price of a product or good.

  • Purpose:

    • Attract more customers and generate more sales.
    • Remain competitive with the prices of competitors.
    • Reduce excess inventory.
    • Clear old or slow-moving stock.

  • Formula:

    • MD = OSP - RSP (Mark Down = Original Selling Price - Reduced Selling Price)
    • OSP = MD + RSP (Original Selling Price = Mark Down + Reduced Selling Price)
    • RSP = OSP - MD (Reduced Selling Price = Original Selling Price - Mark Down)

Mark Down Rate (MDR)

  • Definition: A percentage decrease from the original selling price.

  • Formula:

    • MD = MDR × OSP
    • MDR = (MD/OSP) × 100%

Mark On (MO)

  • Definition: A price increase on a good or product. This adjustment is often temporary, usually done based on higher demand.

  • Purpose:

    • Take advantage of peak demand.
    • Increase prices when supplies are low.

  • Formula:

    • MO = ISP - PSP (Mark On = Increased Selling Price - Previous Selling Price)
    • ISP = MO + PSP (Increased Selling Price = Mark On + Previous Selling Price)
    • PSP = ISP - MO (Previous Selling Price = Increased Selling Price - Mark On)

Mark On Rate (MOR)

  • Definition: Percentage increase from the previous selling price.

  • Formula:

    • MO = MOR × PSP
    • MOR = (MO/PSP) × 100%

Difference Between Margin and Mark Up

  • Margin (Mark Up) is the deduction of all costs from the selling price.
  • It represents the maximum amount added to the product's cost to make the selling price attractive to a buyer.

Application of Gross Margin in Sales

  • Gross margin is the portion of revenue remaining after deducting the cost of goods sold.
  • The cost of the product is the fundamental benchmark.
  • High production costs decrease margins, impacting sales performance.

Additional Notes on Buying and Selling

  • Business owners may buy large quantities of raw materials ahead to achieve the lowest price available. This contributes to substantial margins.
  • Bidding on lowest raw materials is a strategy for lower production costs and improved margins.
  • Margin variations may be seen based on the type of business or establishment (e.g., cafeteria, restaurants, fast-food).

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Quiz Team

Related Documents

Business Mathematics PDF

Description

This quiz covers essential concepts in business mathematics, focusing on buying and selling. You will learn about mark up, selling price, cost price, and mark down. Test your knowledge of the formulas and their applications in real-world scenarios.

More Like This

Use Quizgecko on...
Browser
Open
Browser
Browser