LECTURE 1

A. T Y P E S O F N U M B E R S A N D I T S P R O P E R T I E S

B. F R A C T I O N S , D E C I M A L S A N D P E R C E N T A G E S C O N C E P T S

1.0 F R A C T I O N S - Is a quantity that represents part of a whole. Fractions are written in

the form of one number over another, ie ab example 5 8, 1 4, 97, 1310etc. The number above the line is
called Numerator and the number below line is called Denominator.example in the fraction
3 , the numerator is 2 and the denominator is 3. The denominator is the number of equal parts
2

into which something is divided. The numerator is the number that tells us how many of these
parts are needed, example 23 is 2 parts out of 3 equal parts.

1.1 T Y P E S O F F R A C T I O N S . There are three types of fractions, these includes proper,

improper and mixed numbers

i. Proper fracti ons: If the numerator of a fraction is less than the denominator then
thefraction is called a proper fraction. e.g. 23 , 15 ,4
14 3

ii. Improper fracti ons: A fraction with a numerator greater than or equal to the denom-
inator is known as an improper fraction. e.g. 1713, 1914, 7 7

iii. Mixed numbers: Is the whole number and the proper fraction, that is the sum of a
fraction and a whole number is a mixed number. example 5 2 3 (is short way of writing
5 + 32 ), 3 58, 9 57

(a.) Converting mixed numbers into improper fractions.

A mixed number can be converted into an improper fraction by multiplying the denominator
of the fraction part to the whole number part then add the product to the numerator,the sum
obtained is the numerator of the new improper fraction while the denominator stays the same.
For example to convert 4 58 to improper fraction, multiply 8 by 4 which gives 32 then add 32 to 5
which gives 37 therefore the numerator of the new improper fraction is 37 and the denominator
is 8. Therefore 4 58 = 37 8
(b.) Converting improper fractions into mixed numbers.
To convert improper fractions into mixed numbers, divide numerator of the improper fraction
by the denominator. The quotient obtained is the whole number part of the mixed number and
the reminder is used as the numerator of the fraction part. The denominator stays the same.
For example convert 175 to a mixed number by dividing 17 by 5. This gives 3 2
5

1.2 F R A C T I O N IN I T ’ S L O W E S T T E R M S
If both numerator and denominator of fraction cannot be divided without a reminder by any
 25 25÷5 5

1.3 O P E R AT I O N S W I T H F R A C T I O N S :

1.3.1 A D D I T I O N A N D S U B T R A C T I O N O F F R A C T I O N S

A. Addition and Subtraction of like fractions.

Fractions of the same denominator are called like fractions. Such fractions are said to
have a common denominator. For example 74 and 57 are like fractions with common
denominator 7. Addition and subtraction of like fraction is done by adding or subtracting
the numerators, and then place the results over the common denominator. Example
2
9
+ 39 + 19 = 69 = 23 and 11
15
− 415 = 11−4
15
= 715
B. Addition and Subtraction of unlike fractions.
Fractions like 47 and 5 9 are not like fractions since their denominators are different. To
add or subtract unlike fractions is by first writing the fractions with a least common
denominator ( LC D ) . The L C D of two or more fractions is the smallest whole number that
can be divided evenly by 4, 6, and 5. There are two methods of finding the least common
denominator ( LC D ) , These methods includes inspection and prime number methods.
(a). Inspecti on Method: With small denominators, it may be possible to find least
common denominators by inspection. For example the L C D of 13 and 35 is 15 since
it is the smallest number that can be evenly divided by 3 and 5.
(b). Method of prime numbers. If the L C D cannot be found by inspection method,
use the method of prime numbers. A prime number is the number that can be di-
vided without a reminder by exactly two distinct numbers, itself and 1. the prime
numbers are 2,3,5,7,11,13, ...etc. This method can be illustrated by using the exam-
ple below.
Examp l e 1. Use the method of prime numbers to find the L C D for 125 , 187 and 1120
Soluti on
(i) First write the three denominators; 12 18 20.
(ii)Begin by trying to divide three denominators by the smallest prime number 2.
Write each quotient below the given denominator as shown below:
2 12 18 20
2 6 9 10
3 3 9 5
3 1 3 5
5 1 1 5
• 1 1 1
So the Least Common Denominator is 2 × 2 × 3 × 3 × 5 =
180

Therefore 5 = 15×5 = 75 , 7 = 7×10 = 70 and 11 = 12×9 = 99

12 180 180 18 180 180 20
180 180

Therefore 5 + 7 + 11 = 75+70+99 = 244 = 1 64 = 1 16

12 18 20 180 180 180
45
 11×3 = 33 and 7 = 7×4 = 28

48 48 12 48 48

Therefore 11
+ 7
= 33+28
= 61
= 1 13
16 12 48
48 14
ii By using the same procedure the L C D 11
of 8 and 12 is 24 therefore 87 = 21
24 and 5
12 = 10
24
Therefore 78 − 12
5
= 21
24
− 10
24
= 21−10
24
= 24

C Addition and Subtraction of mixed numbers

(i) A d d mixed numbers: to add mixed numbers, first add the fractions. Then add
the whole numbers and combine the two answers. For example, add 16 38 and 5 16
7
as
shown below:
3 13
16 + 5 = 21
7
8 16
16
To add mixed numbers, change the mixed numbers if necessary, so that the fraction
parts have common denominator. For example add 932 and 641 . The solution is
obtained as follows:
2
9 = 9
8
3
12
1
+6 = 6
3
4
12
11
15
12
(ii) A d d with Car r yi n g: is the sum of fractional parts of mixed numbers greater than
1, carry the excess from the part to the whole number part. This can be illustrated
by the example below:
Example 3. A rubber gasket must extend around all four edges(Perimeter) of the
dishwasher door panel whose width(W) is 34 12 inches and its height(h) is 233 4. Find
the length of the gasket material needed. This can be obtained by adding 3412 inches,
23 34 inches,3412 inches and 233 4 inches
34 12 = 3424 and 23 3 4= 233 4
Adding the we get

2 3 2 3 10 2 2 1
34 + 23 + 34 + 23 = 114 = 114 + 2 = 116 = 116
4 4 4 4 4 4 2.
4
(iii) Subtract mixed numbers: To subtract two mixed numbers, change the mixed
numbers if necessary, so that the fraction parts has common denominator. Then
subtract the fraction parts and the whole number parts separately. For example,
subtract 3 12
1
from 8 5 8, is done by first finding that the least common denominator is
24. Then rewrite the problem as shown below.
 (iv) Subtract with borrowing:This can be illustrated by the following examples.
(i) Subtract 6 3 from 10 1 (ii)Subtract 15 7 from 41.
4 8 12

Soluti on.
Start by rewriting each problem with a common denominator.
10 18 = 1018
−634 = −668 but subtracting 68 from 18 requires borrowing from the whole number 10.
The borrowing can proceed as follows:
1 1 8 1
10 = 9+ 1+ = 9+ + = 9
8 8 9
8 8
8
Therefore
1 6 9 9 − 6= 3
10 6
8 − 6 = 9 − 6 = (9 − 6) 38 8
8 8 8
2. M U LT I P L I C AT I O N A N D+ D I V IS I O N O F F R A C T I O N S .

A. Multiply proper fractions: To multiply two fractions, first multiply the numerators from
a new numerator and then multiply the denominators from a new denominator. Finally
write the answer in its lowest terms if necessary. For example, multiply 2 3and 5 8by first
multiplying the numerators and then denominators.
2 5 2 × 5 10 5
× = = =
3 8 3 × 8 24
12
B. Use cancellation: This problem can be simplified by cancellation, a modification of the
method of writing fractions in lowest terms.
For example
2 5 1× 5
× = =
5
3 8 3× 4
12
C. Multiply mixed numbers: To multiply mixed numbers, change the mixed numbers to im-
proper fractions, use cancellation and then multiply them. For example multiply 6 14 and
2 23 as follows

1 2 25 8 25 × 2 50
64 × 2 = × = = =
3 4 3
2
D. Divide fractions: To divide fractions, invert the second fraction16 (Divisor) and then mul-
tiply the first fraction by the inverted second 1fraction.
×3 3For example,
3 divide 38 by 712 by
inverting the second fraction and then multiplying
3 12 3 × 12 3 × 3
× = = =
9
8 7 8× 7 2× 7
14
E. Divide mixed numbers.To divide mixed numbers, first change all mixed numbers to im-
proper fractions, then invert the second fraction use cancellation if necessary and multiply.
For example , divide9 3 5 by 2 2 . This can be effected as follows:
5
 number, write the whole number as fraction over 1. Multiply
3 3 16
15 16
3 × 16 = 3 × =
× = 15 × 4
Divide: = 60
4 2 12 3 12 1 4 × 4 1 1
2 ÷3= ÷ = × = 4 =1
4
5 5 1 5 3 5×
1 5
2.0 D E C I M A L S
A decimal: Is a number with digits to the write of the decimal point, indicating decimals. Like
fractions, decimals are parts of a whole that are less than one. A decimal point is the center
of the decimal number system. On the left side of the decimal point the whole number part is
found and on the right hand side, the parts of the whole number are found. The relationship
of the place values of digits on the either side of the decimal point is in such a way that, if
you move the digit to the left side of the decimal point by place(ones,tens,hundred,
and so on) you increase its value 10 ti mes. If you move the digit to the right of the
decimal point by place(tenths, hundredths, and so on) you decrease its value 10
ti mes. this is why the decimal point is the center of the decimal number system. For example
2.4: The 4 is in the tenths
2.04: The 4 is in the hundredths
2.004: The 4 is in the thousandths
2.8394: The 4 is in the ten
thousandths

1. RO U N D I N G D E C I M A L S

Rounding decimals involves the following steps:

(i) Identify the place value of the digit you want to
round.
(ii) If the digit to the right of the identified digit in (i) is 5 or more, increase the identified
digit by 1. If the digit to the right is less than 5, don’t change the identified digit.
(iii) Drop all the digits to the right hand of the identified digit.
Examp l e 1. Round 0.3272727 nearest to hundredths.

Soluti on.

(i) 0.3272727. The identified digit is 2, which is in the hundredths place value (two places
to the right side of the decimal point.)
(ii) The digit to the right side of 2 is more than 5(7) thus the identified digit in (i) is changed
to 2 and so now we have 0.33
Examp l e 2: Round 0.3272727 nearest to thousandths.

Soluti on:

(iii) 0.3272727. The identified digit is 2, which is in

the thousandths.
(iv) The digit right to the identified digit is less than 5(2) thus 7 is left unchanged therefore
we obtain 0.327.
2.: F R A C T I O N A N D D E C I M A L CO N V E RS I O N S . In business we frequently convert frac-
tions to decimal numbers and decimal numbers to fractions. in this section we begin with
discussion on conversion of fraction to decimals. let us consider the three types of fractions,
the decimal fractions, proper fractions and the improper fractions.
A. Converti ng decimal fracti ons to decimals: The decimal fractions are fractions
whose
denominators are powers of 10. examples, 110, 100
7
, 1000
23
. Now the procedure to be followed
is as follows.

(i) Count the number of zeros in the denominator.

(ii) Place the numerator of the decimal fraction to the right of the decimal point the
same number of places as you have the zeros in the denominator. Do not go over
the denominator zeros. So 110= 0.1, 7
= 0.07 and 23
= 0.023 100
1000

B. Converti ng proper fracti ons to decimals: Proper fractions are fractions with value
of less than 1.that is the numerator of fraction is less than the denominator. Since the
proper fraction are of the form of division, it is possible to convert proper fractions by
carrying out divisions. The procedure is as follows:

(iii) Divide the numerator of the fraction by its denominator. (If necessary, add a decimal
point and zeros to the number in the numerator)
(iv) Round if necessary. For example 3 = 0.75, 3 = 0.375 and 1 = 0.333
4
8
3

C. Converti ng mixed numbers to decimals: Mixed numbers comprise of a whole num-

ber part and the proper fraction part. To convert a mixed number to decimals, the
following procedure is to be followed:
(ii) Add the converted fraction to the whole number part. For example 8 25 (i) 25 = 0.4
(v) and (ii)8 a+ fractional
Convert 0.4 = 8.4 part into a decimal.

D. Converti ng pure and mixed decimals: A pure decimal has no whole number(s) to
the left of the decimal point. example 0.43, 0.458. A mixed decimal is a combination of
a whole number part and a decimal part, example 737.573. The following steps are to be
followed.

(i) Place the digit to the right of the decimal point in the numerator of the fraction.
Omit the decimal point.
(ii) Put one(1) on the denominator of the fraction.
(iii) Count number of digits to the right of the decimal point. Add the same number of
zeros to the denominator of the fraction.

For example (a) 0.3

Soluti on: (i)3 (ii) 3 (iii) 3 so 0.3 = 3

1 10 10

(b)0.24
 Soluti on: (i)45 (ii) 4 5 (iii) 45 so we obtain 17 45
1 100 100

3. O P E R AT I O N S W I T H D E C I M A L S .

A. Additi on and subtracti on of decimals:Since you know how to add and subtract
whole numbers. To add and subtract fractions you have only to learn the placement of
the decimals. This is done as follows.:

(i) Vertically write the numbers so that the decimal point align. You can place addi-
tional zeros to the right of decimal point without changing the value of the number.
(ii) Add or subtracting the digits starting with the right column moving to the left.
(iii) Align the decimal point in the answer with the other decimal points.

For example
(a)Add 4 + 7.3 + 36.139 + 0.0007 +
8.22
Soluti on: 4.0000
7.3000
36.1390
0.0007
+ 8 .2200
55.6597

(b)Subtract 45.3 −
15.273

Soluti on: 45.3000

−15.27
3
30.027
B. Multi plicati on of Decimals: Multiplication of decimals is similar to the multiplica-
tion of whole numbers except for additional step of placing the decimal point in the
answer(product). This can be done as follows:

(i) Multiply the numbers as whole numbers ignoring the decimal points.
(ii) Count the total number of decimal places in the multiplier and multiplicand.
(iii) Starting at the right in the answer(product),count to the left the number of decimal
places totalled in step (ii). If the total number of places is greater than the places
in the product, add zeros in front of the product.

F or example: (a)8.52 × 6.7

Soluti on:

8.52
×6.7
 57.084

(b)2.36 ×
0.016
Soluti on:
2.36
×.016
1416
236
0.03776

C. Division of Decimals:If a divisor in your decimal division problem is a whole number,

first place the decimal point into the quotient directly above the decimal point in the
dividend. The divide as usual. If the divisor has a decimal point, complete the steps as
follows;

(i) Make the divisor whole number by moving the decimal point to the right.
(ii) Move the decimal point in the dividend to the right the same number of places that
you moved the decimal point in the divisor (i). If there are not enough places add
zeros to the right of the dividend.
(iii) Place the decimal point in the quotient above the new decimal point in the dividend.
Then divide as usual.
For example; Divide 32.8 ÷ 2.5
Soluti on:

D. Decimal Application in Foreign Currency

1. P E R C E N TA G E ( S I M P LY P E R C E N T )

2.Introducti on: Percentages (or simply percent) are widely used in everyday life. For exam-
ple, interest rates in savings and investment, auto mobile loans, home loans and other
instalment loans are almost always given in percentages. Stores often advertise sale prices as
being a certain percent of a regular price.

In business, marketing cost, damage and theft may be expressed as percent of sales. Profit
as percent of investment, labour as percent of cost of production, current government figures
about inflation, recession and unemployment are also reported as percent.

3.2. Defi niti on: Percentages (or simply percent)represent part of a whole, just as fraction or
decimals do.Percents are hundredths or part of hundredths or part of hundred. Therefore one
percent means one (1) part of 100 equal parts. Percent are written with percent sign(%) For
example, 25% refer to 25 parts out of 100 equal parts( 100
25
), 50% refer to 50 parts out of 100
equal parts( and 100% refers to all 100 parts of the 100 equal parts( 100 ) Therefore 100% is
50
If percent is large than 100% (example 150%), more than one item has been divided into 100
equal parts and 150 of those parts are considered. In this section we discuss the various types
of percent problems.

3. T H R E E C O M P O N E N T S O F P E R C E N T P R O B L E M S .

Problems in percent contain three main components. Usually two of these components are
given, and the third component must be found. The three key components in percent problems
are B A S E ( B ) , R A T E ( R ) and P A R T ( P )
A. BA S E (B ): This is the whole or total quantity(100%). It is a starting point or is that to
which something is being compared.
B. R AT E ( R ) : Is a number followed by a % sign or is simply a percent.
C. PA RT (P ): This is a result of multiplying the base and the rate ( B × R = P )
1. F I N D I N G T H E PA R T ( P )
(i) Case Study 1: As a real estate agent with century 21st Real Estate. Thomas Dugally is
paid a commission plan. When he produces income for a company as a result of a sale, a
sale of his listing by someone or a rental agreement that is completed, he is paid a portion
of his income to the company. Currently Dugally is looking for a home in the $210, 000
price range, for Scott and Abriani, a couple he met at an open house.

Questi on: Now consider that Thomas Dugally finds a $210, 000 home for Abrians ans is
paid 6% commission, then the amount he paid in cash is called a part. Therefore
P = B ×R
= 12, 600
Therefore Thomas Dugally will be paid $12, 600
(ii) Example 1:During a recent sale, stockdale marine offered 15% on all new recreation
equipments. Find the discount on a jet ski originally priced at $3895.
Soluti on
First arrange the problem in standard form.
Percent of something is something
% of something is discount
15% of $3895 is discount (or P = R × B )
P = $3895 × 15 = $3895 × 0.15) =
$584.25
(iii) Round table Pizza spends an amount equal to 5.8% of its sale on advertising. If sales for
a month were $28, 500. Find the amount spent in advertising.
Soluti on
% of sales is advertising.
5.8% of $28, 500 = $28, 500 × 0.058
$1653
3.3.2 F I N D I N G T H E B A S E ( B )
In some problems the rate ( R ) and the part(P) are given, but the base(B) or the starting point
P
 (i) Example 1. In business problems involving sales tax the amount of sales always is a base.
Now consider that 5% sales tax collected by Famous Footwear was $780. What was the
amount of total sales?
Soluti on
B = P ; Therefore B = $780
= $15, 600
R 0.05

(ii) Example 2: The number of people who passed the Real Estate license exam was 832. If
this was a 65% pass rate. How many took the exam?

Soluti on
B = PR
= 832
65% = 832
0.65 = 1280.
(iii) Example 3. Suppose that the yearly utility cost of an apartment is 3 1 2% of its value. If
the utility cost is $73, 500 per year, find the value of the apartment.
N OT E ; When solving problems involving investment, the amount of the investments is
the base. Soluti on
3 21 % of the value = utility cost.
3 21 % of the value = $73, 500
3 12 % × B = $73,
500 $73,500 $73,500
B = 31
2 = 0.035 = $2, 100, 000

3.3.3 F I N D I N G T H E R A T E ( R )
In this third type of percent problem, the part and the base are given, and the rate must be
found. The formula for rate ( R ) is obtained from the formula P = B × R ) by making R the
subject, eg R = PB

(i) Example 1: Suppose that there are 1.65 million motorcycles in Tanzania. If 317500 of
the motorcycles are owned by women, find the percent of motorcycle owned by women?
Soluti on

R = P
B = 317500
1,650,000 = 0.1924 = 19.24%
(ii) E X E R C I S E
The average monthly social security benefit to couples will be increased to $1559. If the
current monthly benefit is $1492, what is the percent of increase?

3.4. Increase and Decrease Problems

Business commonly look at how amounts change, either up or down. For example a manager
may want to know the percent by which sales have increased or costs have been decreased,
while a consumer might need to know the price of an item has changed.

In increasing problems, the base (100%) plus portion of a base gives a new value.
Therefore
Original +increase = New Value
In decrease problems, the part equals the base (100% ), minus some portion of the base.
Therefore
Original - decrease = New Value
Worked example.
 (i) The value of a home sold by Thomas Dugally this year is $203, 500, which is 10% more
than last year’s value. Find the value of the home last year.

Soluti on:
Method one:
As per the question

$203, 500 ≡ 100%

x ≡ 10%

So
$203, 500 ×
x =
10% 110%
x = $18, 500

Therefore the value of a home last year is $203, 500 − $18, 500 = $185,
000

Method two:

110% ≡ $203, 500

100% ≡ x
Therefore:
$203, 500 × 100
x= =
$185.000 100
(ii) At builders doors, production last year was 20% more than the year before, this year
production is 93,600 doors, which is 20% more than last years’. Find the number of doors
produced two years ago.

Soluti on:
The two 20% cannot be added together because the increase are from two different years
or two separate bases. The problem must be solved in two steps. So last year’s production
is,
93, 600 93,
B = = = 78,
600
120%
000
1.2 last year is
So the production of the year before

78, 000 78,

B J= =
000
= 65, 000
120% .12
4.1 B U Y I N G
4.0
RetailMbusiness
AT H E M A T I profit
make C S ObyF B U Y I N G items
purchasing A N D and then selling them for more than they cost.
SThere
E L L Iare
N Gseveral
. steps in this process.

(i)Manufacturers: Buy raw materials and component parts and assemble them into prod-
ucts that can be sold to other manufacturers or wholesalers.
 (ii)Wholesaler: Also called middleman, buys from the manufacturers or other wholesaler
and sells to the retailer

(iii)Retailers: Sell directly to the ultimate user or consumer. Document invoices help
business to keep track of sales, while various types of discounts help them buy products at
lower costs so that they can increase profit. Recent technology has enabled business to replace
much of their paper-based business process with electronic solution known as electronic com-
m e rc e ( EC ) . This section covers mathematics needed in working with invoices and discounts.

4.1.1 Invoices and Trade Discounts.

(i). A n Invoice: Is a printed record of purchasing and sale. For the seller it is sales invoices
that records sale. For buyer it is a purchasing invoice that records the purchase. The
invoice identifies the seller and the buyer, describes the items purchases, state the quantity
purchased and provide the unit price of each item.
In addition the invoice shows the amount or extension total( the number of items purchases
times the price per unit), any discounts, the shipping and insurance charges and total
invoice amount.

Trade and cash discounts, are never applied to shipping and insurance charges.
That’s why shipping and insurance charges are not included in invoice total, so the purchaser
must add them to the invoice total to get the total amount due.

(A)Trade Discount: Is a reduction off the original selling price(list price) of an item
and is not related to early payments.

Trade discount are often given to business or individuals who buy an item for resale or pro-
duce an item that will be sold. The seller usually gives the price of an item as a list price(Is
a suggested price at which an item is to be sold to the public.) Then the seller gives a trade
discount that is subtracted from the list price. The result is the net cost or net price, which is
the amount paid by the buyer. The net cost is found by the formula shown later on below;

N e t c o s t = L i st Price- Trade Discount

Example: The list price of a kitchen aid Artisan Stand mixer is $298.80 and the trade
discount is 25%. Find the net cost.

Soluti on
First find the amount of the trade discount by finding 25% of $298.80

25% × $298.80 = 0.25 × $298.80 = $74.70.

Subtracting $74.70 from the list price of $298.80:

$298.80 − $74.70 = $224.10

Therefore the net cost is $298.80

(i) Diff erent between single and series discounts:

In the previous example a single discount of 25% was offered. sometimes two or more discounts
are combined into series or chain discounts. A series is written for example 20/10, which means
that 20% is subtracted from the list price and from the difference another 10% discount is
subtracted. Another discount of 15% could be attached to series 20/10 to give a series discount
of 20/10/15.

(ii) Calculati on of series discount.

(a) Calculati on of series discount separately. Example 1:Kitchen crafters is offered a

series discount of 20/10 on a cooking with calphalon stainless steel cookware set with a
list price of $150. find the net cost after the series discount.

Soluti on;
First multiply 20% by $150

$150 × 20% = $150 × 0.2 = $30

$150 − $30 = $120
Second multiply 10% by $120

$120 × 10% = $120 × 0.1 = $12

$120 − $2 = $108
Therefore the net cost is $108

(b) Calculati on of series discount using compliments to series discounts.

Using this second method to finding the net cost first we need to find the compliment
with respect to 1 or 100% of each single discount.

T h e Complement: is the number that must be added to a given discount to get 1. For
example compliment of 10% (with respect to 1) is equal to1 − 0.1 = 0.9. and (with respect
to 100%) is 100% − 10% = 90%
The compliment of the discount is the portion actually paid. for example 10% discount
means 90% is paid. 25% discount means75% is paid and 50% discount means 50% is paid.

Procedures
Multiply each of the complements of the single discounts to get net cost equivalent. the
net cost equivalent is percent paid. Then multiply the net cost equivalent by a list price
to obtain net cost.

Example; Kitchen crafters is offered a series discount of 20/10 by George Foreman grilling
machine with a list price of $150. Find the net cost after the series discount.

Soluti on
A series discount .........................20/10
Complement with respect to one ............0.8 and 0.9
Multiply complements ......................0.8 × 0.9 =
0.72
Find the amount paid(Net cost)..............0.72 ×
$150 = $108.00
Amount of discount taken ...................$150 −
$108.00 = $42.00
To express a series discount as an equivalent single discount.
A chain or a series discount are often expressed as a single discount rate. To find a single dis-
count equivalent to a series discount is done by multiplying the complement(either with respect
to 1 or 100% of the individual equivalents. The result is the net cost equivalent. Then subtract
the net cost equivalent from 1 or 100%. The result is a single discount that is equivalent to the
series discount. The single discount equivalent is expressed as a percent.

Example: If the optimum energy company offered a 20/10 discount to wholesale accounts on
all heating, ventilation and cooling systems, what was a single discount equivalent?

Soluti on :
Series discount .........................20/10
Complement with respect to 1 ............0.8 and 0.9
Multiply complements ......................0.8 × 0.9 =
0.72
Subtract this result from 1..............1 − 0.72 = 0.28 =
28% Therefore a singe discount is 28%
More Examples:

(i) The list price of an oak dinette set is $695. Find the net cost if trade discounts of 20/15/5
are offered.

Soluti on: Note: A net cost can be found by multiplying the list price by complement of
each of the single discounts in series as shown below.
Net cost = List Price × complements of individual discounts.
Net cost = $695 × 0.8 × 0.85 × 0.95.
Net cost = 448.97.

(ii) Find the list price of a kohler kitchen sink that has a net cost of $243.20 after a trade
discount of 20/20
Soluti on:
Use a net cost equivalent. Start by finding the percent paid, using complements. Series
discount .........................20/20
Complement with respect to 1 ............0.8 and 0.8
Multiply complements(Net Cost Eq) ......................0.8 × 0.8 = 0.64
As the work shows that 0.64 of the list price was paid. Now find the list price with the
standard
ThereforeBpercent
= PR =formula$243.20 R × B = P
0.64
= $380

(B) C A S H D I S CO U N T:
Cash discounts are issued by sellers to encourage prompt payment by customers. In effect the
seller is saying ” Pa y me quickly and receive a discount”. Business always borrow money
for their day-to-day operations. Immediate cash payments from customers decrease need for
borrowed money.

To find a net cost when a cash discount is offered, begin with the list price subtract the
trade discount, then from the result subtract the cash discount. use the following formula:

N e t c o s t = ( ( L i s t Price- Trade Discount)-Cash Discount

The type of cash discounts appears on invoice under terms which can be found on the
right- hand corner of the invoice. Many companies using automated billing systems state the
exact
amount of the cash discount on the invoice. This eliminates all calculations on the part of the
buyer.

Solving cash discount problems using Ordinar y Dati n g Method

The ordinary dating method of cash discount, for example, is expressed on an invoice as:
2/10, n/30, or 2/10, net 30. And read”two ten, net thirty” The first digit is the rate of
discount(2%), the second digit is the number of days allowed to take discount(10 days) and
n/30(net 30) is the total number of days given to pay the invoice in full if the buyer does not
use the cash discount. If this invoice is paid within 10 days from the date of invoice, a 2%
discount is subtracted from the amount owed. If the payment is made between the 11th and
the 30th days from invoice, the entire amount of the invoice is due. After 30 days from the
date of Invoice, the invoice is considered overdue, and maybe subject to late charge.

To find the date invoice, use the number of days each month given in the following chart.
Number of days in each month
30 days 31 days Excepti on
April January, August February
June March, October
September May, December
November June
To determine whether cash discount are earned
To find the date that an invoice is paid is by counting the next day after the date of invoice. The
date of invoice is never counted. another way to determine dates is to add the given number
of days to the starting date. For example to determine 10 days from April 7, add the number
of days to the date(7 + 10 = 17). The due date or 10 days from April 7, is April 17. When the
discount date or net payment date fall in the next month,the number of days remaining in the
current month is found by subtracting the invoice date from the number of days in the month.
Then find the number of days in the next month needed to equal the discount period or net
payment period.
For example determine the date that is 15 days from October 20.
31 − 20 = 11
Then
15 − 11 = 4
Therefore November 4 is 15 days from October 20.

Examp l e 1; A Hershey invoice dated January 2 and offers terms of 2/10, net 30. Find (a)
The last date on which the 2% discount may be taken (b)The net payment date.

Soluti on
(a) Beginning with the invoice date, January 2, the last document for taking the discount is
2 + 10 = 12
(b) The net payment date is day in February. So the last net payment date is 1st February.

Examp l e 2;An invoice received by kitchen crafters for 4840 is dated July 1 and offers 2/10,
n/30. If the invoice is paid on July 8 and the shipping and insurance charges, which was F O B
shipping point, are $18.70 Find the total amount due.

Soluti on
(i)The invoice was paid seven(7) days after its date (8− 1 = 7); Therefore, the 2% cash
discount
 is taken.
(ii) The 2% discount to be taken is $840 × 0.02 = 16.80.
(iii)The cash discount is subtracted from the invoice amount to determine amount due.
Therefore $840 − $16.80 = $823.20 Amount due.
(iv) The shipping and insurance charges are added to find the total amount due.
$823.20 + $18.70 = $841.90 Total amount due.

Solving cash discount problems with end of month dati ng

End-of-month dati ng and proximo dati ng, abbreviated E M O and P R O X , are treated
the same. For example both 3/10 EMO and 3/10 P R OX , means that 3% may be taken as
cash discount if payment is made by 10th of the month that follows the sale. For example an
invoice dated July 14 with terms of 3/10EOM would have a discount date 10 from the end of
the month, or the 10th of august (Aug. 10)

Since this method of increasing the length of time during which a discount may be taken,
it has become common business practice to add an extra month when the date of an invoice
is 26th of the month or later. For example; if an invoice is dated march 25 and the discount
offered is 3/10EOM, the last date on which the discount may be taken is April 10. However
if the invoice is dated March 26(or any later date in march ) and the cash discount offered is
3/10EOM, then the last date on which the discount may be taken is May 10th

Example; If the invoice from Oster is dated June 10 with terms 3/20EOM, find
(a)The final date on which the cash discount may be taken.
(b)The net payment date.
Soluti on:
(a) The discount date is July 20(20 days aft er the end of June)
(b)When no payment due date is given, common business practice is to allow 20 days after the last
date. The net payment date is August 9, which is 20 days after the last discount date July
20, since no net payment is given.

C. COMMISSIONS.
Commission is paid to agents, salesmen or managers on the basis of their performance. If they
sell greater quantity then they get higher commission and vice versa. It is calculated according
to the terms agreed. Commission is also paid to stock exchange brokers. Their commission is
also known as brokerage. This can be well illustrated by the example below:

Examp l e 1: Francis Omondi sells goods on commission basis for a firm in Arusha. com-
mission is paid on sells as follows in addition to his monthly salary of Sh.200,000/=, On the
first Sh. 50,000/= of sales, nothing. On the next Sh. 100,000/= of sales, 8% and on the balance
of sales, 10%. He sold goods worth Sh. 350,000/= during November 2014. Calculate Francis;
total income for november 2014.

Soluti on:
Total Sales = S . 350,000 Commission on the first 50,000 = N I L
8
Commission on the next Sh. 100,000 = 100 × 100, 000 = 8,
10
000Sh
Commission on the balance Sh 200,000= 100 × 200, 000 = 20,
000Sh
The total commission is Sh. (8, 000 + 20, 000) = 28, 000Sh. Therefore Francis’ total income
on November 2014 is Sh. 228,000/=

Examp l e 2:An estate agent charges for the sale of a property 5% on the first Sh. 500,000/=
 Soluti on:

5
On the first Sh 500,000/= the seller receive = 100 × 500, 000 = 25,
000Sh
The remainder = (500, 000 − 25, 000) = 475, 000/ = Now 766, 000 − 475, 000 = 291, 000/
97
=The remainder is equivalent to 97% that is 100 × 291, 000 = 300,
000
therefore the purchaser paid Sh.(500, 000 + 300, 000) = 800, 000Sh.

2. S E L L I N G
Success of a business depends on many things. One of the most important is the price charges
for goods and services. The difference between the amount a business pays for an item ( C O s t )
and the price which the item is sold is called markup (or gross profi t)

1. Terms used in selling:

Cost- Is the amount paid to the manufacturer or supplier after trade and cash discounts have
been taken. Shipping and insurance charges are included in cost.
Selling Price-Is the price at which merchandise is offered to sell to public
Markup, marginal(gross profi t)- Is the difference between the cost and the selling price.(Selling
price-Cost)
Operati ng expenses/ overhead-This include the expenses of operating the business, such as
wages and salaries of employees, rent for building and equipment, uti liti es, insurance and
adverti sing. Even an expense like postage can add up. Mail cost average 6.2% of operating
expenses for small companies to a high as 9.2% for largest companies.
N e t Profi t(Net earnings)- Is the amount remaining for the business after operating expenses
and the cost of goods have been paid. (income tax is computed on net profit)
Generally: The markup represent the amount the retailers must add to the cost of the goods
to cover the operating expenses and make profit.

Selling P r i c e ( S ) = C o s t ( C ) + M a r k u p ( M )
Markup can be based on Cost and it can also be based on selling price. but the same Markup
formula is used.
2.Markups based on Cost: Markup based on cost is expressed as a percent of cost, therefore
business that use percent markup on cost recognize that cost is 100%. This 100% is the base
of the portion of the formula.

Examp l e 1: Nancy Ford bought a snowthrower that cost $210 for the true value hardware
store. She plan to sell the snowthrower for $300. what is Nancy’s markup in dollar? What is
her percent markup on cost?(round to nearest hundredth percent)

Soluti on;
(i)markup in dollars is given by
M = S −C

Therefore
M ($) = $300 − $210 = $90
Nancy’s markup in dollars is $90
 100%

Cost

= $90 × 100% =
42.86%
Examp l e 2: Mel’s Furniture bought$210
a lamp that cost $100. To make his desired profit, he
needed 65% markup on cost. What is Mel’s dollar markup? What is his selling price?

Soluti on;
(i)
S = C + M
Therefore;
S = $100 + 65% of 100
S = $100 + 65 × 100 =
$165.
hence selling price is $165. 100
(ii) Dollar markup = $165 − $100 = $65.
4.2.2.Markups based on Selling Price :Many retailers markup their goods on the selling price
since sales information is easier to get than cost information. These retailers use their prices in
their inventory and report their expenses as percent sales.
Business that markup their goods based on selling price recognize that selling price is
100%. In this case markup is expressed as a percent on selling price.

Examp l e 1: Nancy Ford bought a snowthrower that cost $210 for the true value hardware
store. She plan to sell the snowthrower for $300. what is Nancy’s dollar markup? What is her
percent markup on selling price?(round to nearest hundredth percent)

Soluti on;
(i) markup in dollars is given by
M = S −C

Therefore
M ($) = $300 − $210 = $90
Nancy’s dollar markup is $90

(ii) Percent markup on selling price

Doller markup
R = ×
selling Price
100
= $90 × 100 =
30%
Examp l e 2: Mel’s Furniture bought$300
a lamp that cost $100. To make his desired profit, he
needed 65% markup on cost. What is Mel’s selling price?

Soluti on;
(i)Calculating selling price
S = C + M
 S = $100 + × S = $100 +
0.65S .
100
$100 = S − 0.65S = 0.35S
$100
S = = $285.71
0.35
Hence selling price is $285.72.

(ii) Dollar markup M = S − C = $285.71 − $100 = $185.71

4.2.3.Markdown;
When merchandise does not sell at its marked price, the price is always reduced. The difference
between the original selling price and the reduced selling price is called markdown. Markdown
are reduction from the original selling price which may be caused by seasonal changes, special
promotions style changes and so on.

M a r kd o w n = Original Price- Reduced Pr ice

Markdown percent is calculated as follows:

Markdown A mo u nt
Markdown percent = ×
Selling Pr ice
100
Examp l e 1; Kmart marked down an $18 video to $10.8. Calculate the markdown and
the markdown percent.

Soluti on ;
(i)Markdown is given by
S 0 − S p = $18 − $10.8 =
$7.20
(ii)Percentage markdown is given by;
markdow Amount = × 100 =
%Markdown =
$7.20
selling price 40%
$18.0
Examp l e 2; Jones department store paid its supplier $400 for a T V. On January 10, Jones
marked the T V up to 60% on selling price. As a special promotion, he marked the T V 30% on
February 8 and another 20% on February 28. No one purchased the T V, so Jones marked it
up 10% on march 11. What was the selling price of the T V on March 11?
Soluti on ;
(i) January 10:
Selling price = Cost + Markup
S = C + M = $400 + 60%S
Therefore

S −
0.60S =
$400
Therefore;

70% × 1000 = $700Selling

price
(iii)February 28:20% off, so

100% − 20% = 80%

Therefore;

80% × 700 = $560

(iv)March 11:10% up, so
100% + 10% = 110%
Therefore;
110 ×
110% × 560 = = $616
$560
100