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4.03 Solve Related Mathematical Problems

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4.03 Solve Related Mathematical Problems

- The opening cash drawer contains the coins and currency for the day’s business
- The till is over if there is more money than planned
- The till is short if there is less money than planned

- The extension is the result of multiplying the number of units by the cost per unit
- Add item amounts
- Calculate sales tax and total

2 running shorts at $32.50 each

3 pair of socks at $5 each

Tax is 7.5%

2 x $32.50 = $65.00

3 x $ 5.00 = $15.00

$65.00 + $15.00 = $80.00

$80.00 x .075 = $6.00

$80.00 + $6.00 = $86.00

- Cash sales include cash or checks
- Debit cards are bankcards or ATM cards – funds are withdrawn from the customers checking account

- The amount a retailer actually pays for merchandise

- Cost may be negotiable due to discounts and terms
- Discounts – a reduction in the selling price offered by manufacturers and distributors to their customers to encourage prompt payment and stimulate purchasing
- Allowances – free merchandise given by a manufacturer for large orders as a means of goodwill and to encourage future purchases

- Profit is the amount left from revenue (sales) after the costs of merchandise and expenses have been paid. Expenses include such things as rent, utilities, and salaries.
- Markup is the difference between retail price and cost. In order for a business to be profitable, its markup must be high enough to cover expenses and maintain desired profit.

- Gross profit is a business’ income minus the cost of goods sold.
- Income is the total of all sales for the time period minus any sales returns and allowances
- Cost of goods (merchandise) sold is the actual amount paid to the vendors for the merchandise

- Net profit is what is left after all expenses have been paid by the business

- The most basic pricing formula is the one for calculating retail price when given cost and dollar markup
RETAIL PRICE (RP)= COST(C) + MARKUP (MU)

$500 = $300 + $200

RETAIL PRICE (RP) = COST(C) / 1-MARKUP %

(% markup)

$500 = $300 / 1- 40%

- Formulas for cost and markup can easily be derived from the formula, RP=C+ MU.
Cost= RP – MU Markup= RP - C

$300 = $500- $200 $200 = $500 - 300

- Markup percentage based on retail. When markup percentage is based on retail, retail price always equals 100 %. To determine markup percentage, divide dollar markup by retail price.
MU% BASED ON RETAIL= DOLLAR MU / RP

40% = $200 / $500

- To determine markup percentage based on cost, divide dollar markup by cost.
MU% BASED ON COST = DOLLAR MU / C

66.67% = $200 / $300

- Buying errors. Wrong styles, color, sizes, materials, and/or quantities have been purchased.

- Markdowns are used as a tool to stimulate sales, dispose of slow moving/discontinued merchandise, meet competitors’ prices and increase customer traffic.
MARKDOWN (MD) = RETAIL PRICE X MD%

$25 = $100 X 25%

- Markdowns are expressed as a percentage of net sales and cannot be calculated until merchandise is sold.
MD%= DOLLAR MD / NET SALES

1.8%= $10,000 / $550,000