Lesson 4: Profit and Loss: Diocese of Imus Catholic Educational System

Diocese of Imus Catholic Educational System
Learning Module in Business Mathematics

First Quarter, First Semester
Lesson 4: Profit and Loss

An income statement is the financial statement that shows the results of operation, that is
if it earns a profit or incurs a loss for a given period of time. Generally, a firm prepares financial
statement on a monthly basis. For tax purposes, it is prepared quarterly and annually.
An income statement displays the company’s revenues, selling and administrative
expenses, cost gross profit etc.
https://www.accountingcoach.com/income-statement/explanation/3
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ACCOUNTANCY, BUSINESS AND MANAGEMENT (ABM) STRAND
LEARNING OBJECTIVES
Upon successful completion of this module, you will be able to:
1. differentiate profit from loss (DepEd – MELC, DICES)
2. illustrate how profit is obtained and how to avoid loss in a given transaction (DepEd
– MELC, DICES)
3. determine the break-even point (DepEd – MELC, DICES)
4. solve problems involving buying and selling products (DepEd – MELC, DICES)
MODULE GUIDE
Here’s a simple guide for you in going about the module.
1. Read and follow the instructions very carefully.
2. Take the pretest. It is a simple test provided at the start to determine how much you know
about the content of this module.
3. Check your answers against the answer key provided at the last page of the module.
4. Be very honest in taking the test so you know how much knowledge you already have
about the topic.
5. Do Learning Activity Sheets, LAS should be written by hand.
6. Perform all the activities, as these will help you have a better understanding of the topic.
7. Finally, take the post-test at the end of this module.
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PRE-ASSESSMENT
Before you start studying this module, take this simple test to find out what you already know
about the topics of this module.
A. Identification. Read each statement below. Write the correct answer on the space provided
before each number. Choose your answer inside the box.
profit Variable cost merchandising Markup
loss Break-even point Cost of sales Markdown
Fixed cost Selling price Operating expenses Gross sales/revenue
___________1. It is the price which is sold to a buyer who agrees to buy the product.
___________2. Rent, salary, electricity and telephone cost are considered as
________because they are not affected by the amount of good
sold.
___________3. When the cost price is greater than the selling price, the business
suffers _______________
___________4. Gain in business is normally called _____________
___________5. It includes expenses on raw materials, direct labor, and energy that
vary or change directly with the amount of product produced and
sold.
___________6. The point at which neither profit nor loss is made is known as the ___.
___________7. A __________ firm buys goods then it sells.
___________8. It refers to the total sales.
___________9. How much the seller buys the item is the cost of the item. It is called
as ______________.
___________10. Expenses incurred to run the business like rent, supplies, utilities,
etc.
How was it? Do you find it difficult? Compare your answer with those in the Answer Key to find
out.
If your score is 10, excellent!
If your score is from 7 – 9, impressive!
If your score is from 5 – 6, nice try!!
If your score is from 4 and below, it’s okay! Don’t feel bad.
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This means that this module is for you. It will help you understand important concepts
that you can apply as a future businessman/woman someday.
LESSON PROPER
LAS # 4.1
Activity Title: Profit or Loss?

Learning Target: The learners will be able to: differentiate profit from loss (DepEd –
MELC, DICES)
Values/Graduate Attribute: __________________________________
References: Business Mathematics for Filipinos by Chan Shios
Concept Notes:
 Profit is the difference between gross revenue and total cost, provided that the revenue
is greater than the cost.
 Loss is the difference between gross revenue and total cost, provided that the cost is
greater than the revenue.
 REVENUE - COST = Profit (Positive) / Profit (Negative)
 Determining the profit or loss involves a simple addition and subtraction.
 The revenue is a plus item. All expenses are minus items and, deducted from the
revenue
 The result is a profit if it is positive, and a loss if it is negative
PROFIT
Example:
1. The store gross revenue is P8,245 and the store total cost is P7,124, the earned profit is
P1,121.00 because the total revenue t is greater than the total cost.
2. You bought a bag for P800.00 and you sold the bag to your friend for P1,000
LOSS
Example:
1. The store gross revenue is P7,124 and the store total cost is P7,245, the loss incurred is
P121.00 because the total cost is greater than the total revenue
2. You bought a bag for P800.00 and you sold the bag to your friend for P700
Solution:
P7,124 – P7,245 = -P121(negative)
Exercise: Determine how much your profit or loss was. Write a positive sign(+) before the
amount if it is a Profit and negative sign(-) if it is a Loss. Write your answer on the blank.
Total Cost Gross revenue Profit (+)/Loss(-)

1. P1,200+P120+P150 P1,900
2. P1, 370 P1,650
3. P 53,560 + P5,000 P58, 500
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4. P350 P280 + P75

5. P1,870 P1340 + P455
LAS #4.2
Activity Title: ___Yes Profit no to Loss__
Learning Target: The learners will be able to: illustrate how profit is obtained and how to avoid
loss in a given transaction (DepEd – MELC, DICES)
Concept Notes:
Quantity sold(x) – number of units sold
Unit Price(P) – price of goods per piece, price of one item or measurement by kilogram etc.
Unit cost(v) – the cost of producing one single product
Unit Profit – profit per item.
 Formula: Unit Price(P) – Unit cost(v) = Unit Profit
 Formula: Profit = Unit Profit x Quantity Sold(x)
 Formula: Total Profit = Total/Gross Revenue – Total cost (fixed and variable cost)
Cost has 2 kinds:
1. Fixed cost- Rent, electricity and telephone bills are considered as Fixed cost because they
are not affected by the amount of good sold. It stays the same month to month.
2. Variable cost- is an expense that rises or falls in direct proportion to production volume
like the price of raw materials, employee overtime, work vehicle expenses. It varies, it
changes month to month.
Let us Learn!
Compare column A and B and answer the following questions below the table:
Compare: A VS. B
Quantity sold(x) If x = 100 If x = 20
P50x VS. P50x
P50(100) = P5,000 P50(20) =P1,000
unit Price (P) If P = P75 VS. If P = P50
If same (x) = 20 P75(20) = P1,500 P50(20) = P1,000
Fixed cost (FC) If FC = P250 If FC = P400
If Gross revenue = P1,000 Total cost = P250 + VS. Total cost = P400 +
If variable cost is = P300 P300 P300
P1,000 - P550 = P450 P1,000 - P700 = P300
Variable cost per unit(v)

Unit Profit = Unit Price – Unit cost P175 – P125 = P50 VS. P175 – P75 = P100
Check Your Understanding!
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Answer the question by fill-in the blank using the word more, lesser, higher, lower.
1. What can you conclude in terms of quantity sold?
Which gain more profit?
The ___________ quantity sold, the __________ profit.
2. What can you conclude in terms of unit price?

The ___________ the unit price, the _________ profit.
3. What can you conclude in terms of fixed cost?

The ___________ the fixed cost; the _________ profit.
4. What can you conclude in terms of variable cost?

The ___________ the variable cost; the _________ profit
Example:
1. Betty plans to sell customized bags in an upcoming bazaar. To create one bag, she has to
spend P412 for the materials, and she will sell it P450. To participate in the bazaar, she
has to pay participation and rental fees totaling P5,000. If she was able to create 130
bags, and she believes she can sell them all, should she participate in the bazaar?
Solution:
P450 x 130 = P58,500(expected total revenue)
P412 x 130 = P53,560(expected production cost)
P58,500 – (P53,560 + P5,000)
P58,500 – P58,560 = -60 or a loss of P60.00. Since, she will incur a loss, it would be best for her
not to join the bazaar, or produce more bags.
Check Your Understanding!
1. What do you think will Betty should do in terms of quantity sold, Price unit, fixed cost,
variable cost so she can join in the bazaar?
2. Aside from the given above (quantity sold, Price unit, fixed cost, variable cost), what
other way do you think is effective to make sure that you can participate the bazaar and
earn more profit.
Scoring Rubric 5 4 3
Stand Taken Completely Somewhat Failed to defend
defended and defended and and prove the
proven the chosen proven the chosen chosen stand
stand stand
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LAS #4.3
Activity Title: Breakeven point!

Learning Target: The learners will be able to: determine the break-even point (DepEd –
MELC, DICES)
Concept Notes:
 A business is in breakeven if the total revenue generated is equal to the cost incurred.
The number of items that needs to be sold to attain this is called the breakeven point
 BREAKEVEN POINT FORMULA
¿ Cost
x=
Unit price−variable cost per unit
where x = breakeven point or number of units
Examples:
1. Andres designs and produces customized shirts. He sells them for P250.00 per shirt.
Plain shirt cost him P120.00, and his monthly utilities (rent and electricity) cost him
P7,410.00. How many customized shirts should he sell to avoid incurring losses?
Solution:
Let x be the number of shirts Andres needs to sell. For him to avoid losses, his total revenue
must be greater than the total cost. Then,
Revenue > Cost

250x > 120x + 7,410
130x > 7,410
x > 57
 He has to sell more than 57 shirts. Why? Because;
 57 x 130 = P7,410 ← ← Revenue and cost are equal
Alternatively, to solve for x = breakeven point
¿ Cost
x=
Unit price−variable cost per unit
P7,410 P 7,410
x= x= x = 57
P 250−P120 P 130
2. Find the break-even point in units given that the unit price of a certain thing is P15;
variable cost, P5.00; and total fixed cost, P12,000.
Solution:
P 12,000.00
x=
P15.00−P5.00
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P12,000.00
x=
P10
x=1,200
Try This!
1. A company sells tablets for P3,700.00. If the cost to produce one tablet is P2,900, and
the company has a total fixed cost of P36,000, determine the company’s breakeven
point.
2. Unit/variable cost- P150
Unit price/sales- P200
Fixed cost – P7,500
How many items should be sold to breakeven?
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LAS #4.4
Activity Title: Buying and Selling Problem
Learning Target: The learners will be able to: solve problems involving buying and selling
products (DepEd – MELC, DICES)
Concept Notes:
A trading or merchandising firm buys goods that it sells. Whatever it buys, it sells.
Examples:
1. Maria owns a small pastry shop that sells cupcakes. Last month, she was able to sell
1,012 pieces of cupcakes for P45.00 each. To produce one cupcake, she has to spend
P33.00 for the ingredients. Aside from the cost of goods bought, she also has to pay for
rent and electricity that amount to P4,000 and P2,300, respectively. How much is her
profit for the month, if any?
Solution:
P45 x 1,012 = P45,540 (Total sales)
P33 x 1, 012 = P33,396 (Total cost)
P45,540 – (P33,396 + P4,000 + P2,300)
P45,540 – P39,696 = P5,844 (Profit)
2. A small sari-sari store earned a total of P7,124 last month. On the other hand, its
expenses included P5,145 for the groceries and P2,100 for electricity. How much profit if
any?
Solution:
P7,124 – (P5,145 + 2,100)
P7,124 – P7,245 = - P121
Try This!
1. Angela has profits of P250 a day selling ihaw-ihaw outside in their house. How much can
she earn in a month if she sells ihaw-ihaw 5x a week? What can she do to make her
business grow?
2. A manufacturing company had a total revenue of P21,640 for the month of July. The
expenses that the company incurred for the said month can be seen below.
Cost of Goods Sold : P5,641.00

Operating Costs : P6,712.00
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Depreciation Costs : P1,245.00

Taxes : P2,412.00
Did the company earn profit or incur a loss? How much is its profit/loss?
ENRICHMENT
1. Answer chapter review Page 104 #8 (a,b,c,d)
2. A customized notebook has a unit cost of P23.00 and a unit price of P30.00 how much is
the fixed cost if the breakeven point is 143 notebooks?
- REFLECTIVE JOURNAL
Make a reflection about what you have learned in this module: Profit and Loss.
Use the guide questions to write a reflection.
Note: your answer must not be less than 7 and not more than 10 sentences
GUIDE QUESTIONS:
1. Which part of the lesson is most challenging to you?
2. How did the knowledge of functions help you in this section?
3. Is profit and loss applicable to business or money matters only?
4. How are you going to relate profit, loss and breakeven concept in your life?
Rubrics Insights/ Explanation

5 Explained clearly and comprehensively the real-life situation that involves
profit, loss and breakeven in everyday life
3 Explained somewhat the real-life situation that involves profit, loss and
breakeven in everyday life but with minimal errors
1 Failed to explain real-life situation that involves profit, loss and breakeven
in everyday life
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POST-ASSESSMENT
Name: ________________________________________________ Date: ________________
Grade and Strand/Section: __________________________________
KNOWLEDGE. Write P if the scenario describes a profit and L if it describes a loss from the
sale. Write your answer before each number.
_________1. Mark buys a secondhand car for P350,000, spends P48,000 on paint and repairs,
and sells it for P460,000
_________2. Justin sells shoes online. Because of too much competition, he was forced to
markdown a pair of sneakers fromP2,500 to P1,900. He bought the shoes at P2,100.
_________3. The cost of a pack of apples is P240 and it is sold at a 6% markup based on cost.
_________4. The cost of supplies to make a painting is P1,200 and Jeffrey sells it for P2,250.
_________5. A television set purchased for P5,400 was resold for P4,800.
B. Encircle the letter of the correct answer.
Kimilara Enterprises manufactures a mobile phone accessory with fixed cost P10,560 and
variable cost at P34. The price of the accessory is given as P100.
1. Which equation represents the revenue function R(x)?

A. R(x)= 34x C. R(x)= 100x
B. R(x) = 134x D. R(x)= 10,560x
2. Which equation represents the total cost function C(x)?
A. C(x) = 34x + 10,560 C. C(x)= 100x + 10,560
B. C(x)= 134x + 10,560 D. C(x) = x + 10,560
3. Which equation represents the profit function (P)x?
A. (P)x = 100x – 34x +10,560
B. (P)x = 100x – 34x -10,560
C. (P)x = 100x + 34x +10,560
D. (P)x = 100x + 34x - 10,560
4. At what level of production will they break-even?
A. 146 units C. 100 units
B. 79 units D. 160 units
5. How much profit will be earned if they sell 500 units?
A. P77,560 C. P56,440
B. P22,240 D. P22,440
PROCESS. Answer the following questions carefully. Be guided by the given rubric.
Rubric for Process and Understanding
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5 4 3 2
Shows complete Shows substantial Shows minimal Shows very limited
understanding of the understanding the understanding of the understanding of the
concept of profit and concept of profit and concept of profit and underlying concept
loss loss loss needed
Problem:
To produce and sell 40,000 pieces of notebook, a bookstore will have fixed and variable costs
totaling to P500,000. The bookstore wants to make a profit of P250,000. At what price must
the notebooks to be sold to make the profit they want?
Show your solution by illustration or in a creative way.
Your answer here!
UNDERSTANDING
1. What can you infer from the pictures above? Explain.

________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
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2. As a future entrepreneur, what are you going to do to obtain profits and how are you
going to avoid loss in a given transaction?
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
REFERENCES
1. Sibs Business mathematics by Yvette Lim etal. p.125
2. Math Connections in the Digital Age Business Mathematics by Luis Allan B.
MelosantosTh p.111
3. Business mathematics by Norma B. Lopez-Mariano p.131
ANSWER KEYS
Pre- Assessment
1. Selling price
2. Fixed cost
3. Loss
4. Profit
5. Variable cost
6. Break-even point
7. Merchandising
8. Gross sales/ revenue
9. Cost of Sales
10. Operating Expenses
LAS # 4.1
1. +P430
2. +P280
3. -P60
4. +P5
5. -P75
LAS #4.2
1. More/higher or lesser/lower (Direct proportional)
2. Higher/higher or lower/lesser (Direct proportional)
3. Higher/lesser or lower/higher (Inversely proportional)
4. Higher/lower or lower/higher (Inversely proportional)
Check your Understanding! Answer may vary
LAS# 4.3 Try This!
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1. X = 45
2. P150
LAS# 4.4 Try This!
1. P1,250 in a week, P5,000 in a month.
2. P5,630
Enrichment
1.
a. P187.50
b. 54 boxes
c. – P375 (incurred loss)
d. X = 120
2. Fixed cost is P2,431
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Diocese of Imus Catholic Educational System

Learning Module in Business Mathematics

Lesson 4: Profit and Loss

Here’s a simple guide for you in going about the module.

1. Read and follow the instructions very carefully.

5. Do Learning Activity Sheets, LAS should be written by hand.

7. Finally, take the post-test at the end of this module.

Activity Title: Profit or Loss?

 REVENUE - COST = Profit (Positive) / Profit (Negative)

 Determining the profit or loss involves a simple addition and subtraction.

 The result is a profit if it is positive, and a loss if it is negative

Total Cost Gross revenue Profit (+)/Loss(-)

4. P350 P280 + P75

Variable cost per unit(v)

Check Your Understanding!

2. What can you conclude in terms of unit price?

3. What can you conclude in terms of fixed cost?

4. What can you conclude in terms of variable cost?

Activity Title: Breakeven point!

 BREAKEVEN POINT FORMULA

where x = breakeven point or number of units

Revenue > Cost

Alternatively, to solve for x = breakeven point

Cost of Goods Sold : P5,641.00

Depreciation Costs : P1,245.00

Rubrics Insights/ Explanation

1. Which equation represents the revenue function R(x)?

1. What can you infer from the pictures above? Explain.

2. Fixed cost is P2,431

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