1. Understanding Cost Price and Selling Price

The cost price (CP) is the original price paid for an item, while the selling price (SP) is the price at which it is sold. The relationship between CP and SP is fundamental in calculating profit and loss:

  • Profit: SP - CP
  • Loss: CP - SP

2. Gross Margin and Markup

Gross margin is the difference between sales and the cost of goods sold, often expressed as a percentage.

The formula for gross margin percentage is:

Gross Margin % = (Profit / SP) × 100

Markup, on the other hand, is the amount added to the CP to determine the SP:

Markup = (SP - CP) / CP × 100

3. Sample Practice Questions & Rationalizations

Question 1: If a shirt is bought for ₱500 and sold for ₱650, what is the profit?

A) ₱150
B) ₱200
C) ₱100
D) ₱250
Rationalization: Profit = SP - CP = ₱650 - ₱500 = ₱150. Thus, the answer is A.
Question 2: If a laptop originally priced at ₱30,000 is marked down by 20%, what is the new price?

A) ₱24,000
B) ₱25,000
C) ₱26,000
D) ₱28,000
Rationalization: Mark down = 20% of ₱30,000 = ₱6,000. New price = ₱30,000 - ₱6,000 = ₱24,000. Thus, the answer is A.
Question 3: A book costs ₱150 and is sold for ₱120. What is the percentage loss?

A) 20%
B) 15%
C) 10%
D) 30%
Rationalization: Loss = CP - SP = ₱150 - ₱120 = ₱30. Percentage loss = (₱30 / ₱150) × 100 = 20%. Thus, the answer is A.
Question 4: If a product's SP is ₱200 with a gross margin of 25%, what is the CP?

A) ₱150
B) ₱160
C) ₱170
D) ₱180
Rationalization: Gross Margin = 25% of SP. Profit = 0.25 × ₱200 = ₱50. CP = SP - Profit = ₱200 - ₱50 = ₱150. Thus, the answer is A.

4. Key Traps to Avoid & Test Day Tips

Beware of common traps in these problems, such as confusing markup with gross margin or miscalculating discounts as percentages of the selling price rather than the cost price. Always double-check your calculations and read questions carefully to avoid misinterpretation.

For additional practice, remember to download the free Civil Service Reviewer 2027 app, available on both iOS and Android, for more resources and practice questions.

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