BUSINESS MATHEMATICS

&

STATISTICS

LECTURE 15Review Lecture 14

Financial Mathematics Part 2

PARTIAL PAYMENTS

You owe Rs. 40,000. Your terms were 3/10

Within 10 days you sent in a payment of Rs. 10,000 How much is your new balance?

MARKETING

TERMSManufacturer Cost

The price charged to middlemen in ‘The Distribution Chain’

Distributor>Wholesaler>RetailerSelling Price

The price charged to Consumers by Retailers

MARKETINGGross Sales Rs X Less: Cost of Good Sold X Gross Profit X

(Margin/MarkUp) Less: Operating Expenses X Net Profit (Income) Rs. X

Operating Expenses Expenses the company incurs in operating the

business,e.g. rent, wages and utilities

SELLING PRICE

Selling Price (S) = Cost (C) + Markup (M)Example

A computer’s cost = 9,000 + 3,000 Rs.

= 12,000 Rs.

Rs. 3,000 is margin available to meet Expenses and make a Profit

MARKUP

If the MarkUp is to be 33% on Cost then…Selling Price (S) = Cost (C) + Markup (M)

133% = 100% + 33%Cost is 100% the Base

% MarkUp is the Rate

Rs. MarkUp is the Portion

MARKUP

You buy candles for Rs. 10 You plan to sell them for Rs.15 What is your Rs. markup?

What is your percent markup on cost?

Selling price – cost= 15 – 10

= Markup = 5 Rs.

% markup = 5/10*100 = 50%

Selling Price

Fawad’s Appliances bought a sewing machine for Rs. 1,500

To make the desired profit, he needs a 60% markup on Cost.

What is Fawad’s Rs. markup?

What is his Selling price?

Selling Price

Rs. Markup = 1,500 x 0.6= 900 Rs.

Selling Price = 1,500 + 900 = 2,400 Rs.

Or= 1,500 x (1+0.6)

= 1,500 x 1.6= 2,400 Rs.

Rs. MarkUp and Percent on Cost

Tanveer’s flower business sells floral arrangements for Rs.35.

To make his desired profit, Tanveer needs a 40% markup on cost.

What do the flower arrangements cost Tanveer?

What is the Rs. markup?

Rs. MarkUp and Percent on Cost

S = C + M

35 = C + .40(C)

35 = 1 .40(C)

C= 35/1,4= 25 Rs.

M = 25 x 0.4

= 10 Rs.

MARKUP AGAIN

You buy candles for 2 Rs. You plan to sell them for 2.50 RsWhat is your Rs. markup?

What is your percent markup on Selling Price?

MARKUP AGAIN

Rs. Markup = 2.5 – 2 = 0.5 Rs.

Percent markup on Selling Price = (0.5/2.5) x 100

= 20%

Selling Price Again

Fawad’s Appliances bought a sewing machine for Rs. 1,500

To make the desired profit, he needs a 60% markup on Selling price

What is Fawad’s Rs. markup?

What is his Selling price?

Selling Price

Selling Price S = 1,500 + 0.6SS-0.6S = 1,500 Rs.

Or0.4S= 1,500 = 3,750 Rs

Rs. Markup = 3,750 x 0.6= 2,250 Rs.

Rs. MarkUp and Percent on Cost

Tanveer’s flower business sells floral arrangements for Rs. 35.

To make his desired profit, Tanveer needs a 40% markup on selling price

What do the flower arrangements cost Tanveer?

What is the Rs. markup?

Selling Price

Selling Price =35 = C + 0.4x 35

35= C + 14C = 35 – 14

= 21 Rs.Or

C= S- 0.4 S= 0.6 S = 0.6 x 35= 21 Rs.

Rs. Markup = 35 x 0.4 = 14 Rs.

Converting MarkupsConverting 50% MU on Cost

= ? % MU on SFormula

% Markup on Selling Price (mus) to % Markup on Cost (muc)=

% markup on C1 + % markup on C

mus = muc/1+muc= 0.5/1+0.5 = 0.5/1.5

mus= 0.3333 = 33.33%

Converting Markups

Converting 33.33% MU on Sale = ? % MU on C

Formula% Markup on Selling Price (mus) to

% Markup on Cost (muc)=% markup on S

1 - % markup on S

muc = mus/1-mus= 0.3333/1 – 0.333

= 0.3333/0.6666 = 0.5= 50%

BUSINESS MATHEMATICS

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STATISTICS

MARKDOWNFormula

%Markdown = Rs. Markdown Selling Price (original)

Store A marked down a Rs. 500 shirt to Rs. 360

What is the Rs. Markdown

What is the %markdown?

MARKDOWNRs. Markdown = Old S – New S = Rs.

500 – Rs. 360 = Rs. 140 Markdown%Markdown = Markdown

Old S

= 14 50

= 0.28 = 28 %

MARKDOWNA variety of plastic jug was bought for

Rs. 57.75 was marked up 45%

of the Selling Price

When the jugs went out of production,they were marked down 40%

What was the Sale Price after the 40% markdown?

MARKDOWNSelling price = 100

Markup = 45Cost = 55

Original Sale price= (100/55) x 57.75= 105

Markdown = 40 % = 0.4Rs. Markdown = 105 x 0.4 = 42

Reduced sale= 105 - 42= 63 Rs.

BUSINESS MATHEMATICS

&

STATISTICS