# Functional Skills: Problems Involving Money

## Functional Skills: Problems Involving Money Revision

**Problems Involving Money**

There are several types of problems that you will encounter involving **money** – some are harder than others.

There are **5** skills that you need to learn for problems involving money.

Make sure you are happy with the following topics before continuing.

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**Skill 1: Converting between pounds (Â£) and pence (p)**

Many questions require you to add and subtract values in both pounds (Â£) and pence (p), so you need to be able to switch between the two.

- To go from pounds to pence,
**multiply**by 100 - To go from pence to pounds,
**divide**by 100

**Example:** To convert Â£3.27 into pence, we multiply 3.27 by 100

So,

Â£3.27=327p

**Example:** To convert 47p into pounds, we divide 47 by 100

So,

47p =Â£0.47

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**Skill 2: Rate of Pay**

The **rate of pay** is the cost of something per unit of time, for example a phone call may cost 25p per minute or someone may get paid Â£11.70 per hour.

Often questions require you to combine a rate of pay with a **fixed fee**, or combine two **different rates of pay**.

**Example:** Sarah earns \textcolor{red}{Â£9.80} per hour and works \textcolor{limegreen}{30} hours in one week. She earned \textcolor{red}{Â£32.50} in tips.

How much did she earn in the week?

First calculate how much she earns from her hourly rate of pay: \textcolor{limegreen}{30}\times \textcolor{red}{Â£9.80}=Â£294

Then calculate her total earnings for the week: Â£294+\textcolor{red}{Â£32.50}=\textcolor{black}{Â£326.50}

**Example:** Stephen wants to re-tile his bathroom and also replace his shower.

A tiler charges \textcolor{red}{Â£24} per hour and says it will take \textcolor{limegreen}{11} hours work.

A plumber charges \textcolor{red}{Â£28.50} per hour and says it will take \textcolor{limegreen}{9} hours to fit the work.

How much will it cost Stephen in total to do both jobs?

Cost of re-tiling his bathroom: \textcolor{red}{Â£24} \times \textcolor{limegreen}{11}=Â£264

Cost of replacing his shower: \textcolor{red}{Â£28.50} \times \textcolor{limegreen}{9}=Â£256.50

Total Cost: Â£264+Â£256.50=\textcolor{black}{Â£520.50}

**Skill 3: Discounts and Increases as Percentages**

Often questions ask you to find the new price of an item after it has been **increased** or **discounted** by a certain percentage.

For LEVEL 1 you will **only** see discounts and increases given in multiples of 5\%, where as for LEVEL 2 you will need to work with all percentages.

You may need to re-visit **percentage increase and percentage decrease** to help you answer these types of questions.

**Price Decrease**

If a product’s price has been reduced by a percentage, we take this value away from 100\% and then convert this value into a decimal to then multiply it by the original price.

**Example:** A pair of trainers costs \textcolor{orange}{Â£45}. If there is a sale on which gives \textcolor{blue}{20\%} off the price, what will be the new price of the trainers?

New price of the trainers: \textcolor{orange}{Â£45}\times0.8=\textcolor{black}{Â£36}

**Price Increase**

If a product’s price has been increased by a percentage, we add this value to 100\% and then convert this value into a decimal to then multiply it by the original price.

**Example:** Lucy bought a house for \textcolor{orange}{Â£210000} last year, she has the house valued 1 year later and is told that the value of the house has increased by \textcolor{blue}{10\%}. Calculate the new value of the house.

100\%+10\%=110\%=1.1

New value of house: 1.1 \times \textcolor{orange}{Â£210000}=\textcolor{black}{Â£231000}

**Note:** Alternatively, we could have found what 10\% of Â£210000 was and then added this to the original value of the house.

**Skill 4: Discounts as Fractions**

You could also be asked to find the new price of an item after a **discount** in terms of a fraction has been applied.

You may need to re-visit **fractions** to help you answer these types of questions.

**Example:** A bike costs \textcolor{orange}{Â£330}. If there is a sale on which gives \textcolor{blue}{\dfrac{2}{5}} off the price, what will be the new price of the bike?

First, calculate \dfrac{2}{5} of the original price:

2 \div 5 \times \textcolor{orange}{Â£330} = Â£132

Then, subtract this from the original price of the bike:

\textcolor{orange}{Â£330} - Â£132 = \textcolor{black}{Â£198}

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**Skill 5: Percentage Profit**

**Percentage profit** is the profit of selling an item as a percentage of the total costs involved.

\text{\textcolor{purple}{Profit}} = \text{\textcolor{blue}{Selling Price}} - \text{\textcolor{red}{Costs}}

\textcolor{limegreen}{\% \text{ Profit}}=\dfrac{\text{\textcolor{purple}{Profit}}}{\text{\textcolor{red}{Costs}}}\times100

**Example:** Gareth buys an old car for Â£1250, he then buys some replacement parts for Â£250. He sells the car on for Â£2100, calculate his percentage profit.

Profit =Â£2100-(Â£1250+Â£250)=Â£600

\% Profit =\dfrac{600}{1500}\times100=40\%

## Functional Skills: Problems Involving Money Example Questions

**Question 1:Â **Convert 157p into pounds (Â£).

**[1 mark]**

To convert pence into pounds we need to divide by 100

157 \div 100=1.57

So,

157p = Â£1.57

**Question 2:Â **Henry earns Â£10.20 Monday to Friday and Â£11.60 on weekends.

The table below shows his shifts for this week.

Henry’s breaks are not paid.

Work out how much Henry earns in the week.

**[4 marks]**

First we need to work out how many hours he works from Monday to Friday.

6+7.5+8=21.5 hours

Then subtract his breaks

21.5-(0.5+0.75+1)=19.25 hours

Now work out how many hours he worked during the weekend.

6+6=12 hours

Subtracting his breaks:

12-(0.5+0.5)=11 hours

Finally, calculate how much he earns during the whole week:

19.25 \times Â£10.20 + 11 \times Â£11.60=Â£323.95

**Question 3:Â **A shop is having a sale on all t-shirts of 25\%. Sam wants to buy a t-shirt, with an original price of Â£32.

Calculate the sale price of the t-shirt.

**[2 marks]**

100\%-25\%=75\%=0.75

Â£32\times0.75=Â£24

**Question 4:** Liam wants to book a hotel for a 7-night stay. The cost of the hotel for this stay is usually Â£480. An offer gives \dfrac{2}{15} off the usual price.

How much will the hotel cost Liam with the offer?

**[2 marks]**

Calculate \dfrac{2}{15} of the usual cost:

2 \div 15 \times Â£480 = Â£64

Then, subtract this from the usual cost:

Â£480 - Â£64 = Â£416

**Question 5: **Carla buys a house for Â£180000 and then spends Â£20000 on refurbishing the house.

She then sells it for Â£230000

Work out her percentage profit on the house to 1 decimal place.

**[2 marks]**

Profit =Â£230000-(Â£180000+Â£20000)=Â£30000

% Profit =\dfrac{30000}{200000}\times100=15.0\%

## Functional Skills: Problems Involving Money Worksheet and Example Questions

### Problems Involving Money L1

FS Level 1NewOfficial PFS### Problems Involving Money L2

FS Level 2NewOfficial PFS[responsive-flipbook id=”pfs_pocket_revision_guide_-_sample”]

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