# Review - PowerPoint PPT Presentation

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Review. Return on Investment is a calculation that is used to determine the relative profitability of a product Profit / Investment = Return on Investment Break Even Point is the point at which sales revenue equals the costs and expenses of making and distributing.

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Review

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### Review

• Return on Investment is a calculation that is used to determine the relative profitability of a product

• Profit / Investment = Return on Investment

• Break Even Point is the point at which sales revenue equals the costs and expenses of making and distributing.

• Price sold at / Cost of making and marking = Break Even

## Pricing math

### Because Everyone takes to long to take notes.

• (P) – Price

• (D)% - Discount Percent

• (D)\$ - Discount Dollars

• (NP) – Net Price

• (SP) – Sales Price

• (C) - Cost

• (MM)\$ - Maintained Markup Dollar

• (MM)% - Maintained Markup Percentage

• (MD)\$ - Markdown Dollar

• (MD)% - Markdown Percentage

• (MU)\$ - Markup Dollar

• (MU)% - Markup Percentage

### Profit vs.Markup

• Basic Markup Calculations

• Cost (C) + Markup (MU) = Retail (RP)

• Retail Price (RP) – Markup (MU) = Cost (C)

• Retail price (RP) – Cost (C) = Markup (MU)

### Percentage Markup

• Determine the dollar markup

• RP – C = MU\$

• Change the dollar markup to the percentage markup, divide it by the retail price. Result will be a decimal

• MU\$/RP = MU%

• Change the decimal to a percentage

• .40 = 40%

• On page 487

### Calculations for lowing prices

• Markdowns – Reduce the quantity of goods in stock, a business will sometimes mark down merchandise by a certain percentage.

• Retail Price (RP) x Markdown % = (MD)\$

• Retail Price (RP) – Markdown\$ = Sales Price (SP)

### Calculations for lowing prices

• Maintained Markup – Different between an item’s final sale price and its cost.

• Retail Price (RP) – Markdown\$ = Sales Price (SP)

• Maintained Markup

• SP – C = Maintained Markup (MM)\$

• Determine the maintained markup percentage

• (MM) \$ Divided by SP = (MM)%

### discounts

• Discount is a reduction in the price of good and services sold to customers.

• Multiply the price by the discount percentage to get the dollar amount of the discount

• (P) x (D)% = (D)\$

• Subtract the discount from the price to get the net price

• (P) – (D)\$ = NP

### Discounts

• Cash Discounts is a discount offered to buyers to encourage them to pay their bills quickly

• Determine the dollar discount

• (P) x (D)% = (D)\$

• Determine the net price

• (P) – (D)\$ = (NP)