5.03 Fashion Math

1. 5.03 Fashion Math

2. Steps Necessary to Open and Close a Cash Drawer • Verify the opening change fund is the amount of money actually provided for the cash drawer. • ***Change fund: Coins and currency designated for use in opening the register for a given day’s activity. • Till: The cash drawer of a cash register.

3. **you will have to make a calculation • Before making any sales for the day… • Count the change fund. • Compare the actual change fund with the amount designated for the day. • Follow company procedures to record the result and to correct any difference before making sales.

4. Balance the cash drawer. • End of the day. • Count the cash + checks in the drawer. • Complete a closing balance report. • Opening change fund + cash received from sales – (minus) cash paid out should equal actual cash in the drawer at the end of the day. • Differences are recorded as cash short or cash over on the balance report.

5. Cash Sales Transactions • Determine total due from customer. ***(you do the math) • Add the retail price for each item to determine subtotal. • Calculate sales tax and add to subtotal. (**you do the math) • Sales tax: A government fee, usually a percentage of the total sale, which is added to the retail price of goods paid by the final user.

6. Tell customer the amount of the sale. • Repeat to customer how much they handed you (amount tendered).

7. Make change as necessary. • If register displays the change to be given to customer, count out the change back to them • Always place the money received from the customer on the cash drawer ledge until the transaction is completed.

8. Count change silently to yourself as you remove it from the till. • beginning with the largest bill and counting up to the amount of the change to be returned.

9. Retail Sales Terms • **Cost (Cost of merchandise sold):The amount a retailer pays the supplier for an item for resale. • Reflects wholesale price, vendor discounts/allowances, and transportation charges • ***Used to calculate Mark-up on a product

10. Employee discount: Set reduction in retail price given to employees at time of sales transaction. • Entices employees to buy the product they sell. • Typical discounts = ***10% to 30%.

11. ***Extension: The result of multiplying the number of units by the cost per unit. • Final selling price: The price at which merchandise ultimately sells after all markups and/or markdowns are taken.

12. Gross profit: Sales revenue minus cost of merchandise sold. • Gross sales: Total revenue from sales before considering returns, allowances, or adjustments.

13. Initial markup:The difference between merchandise cost and the selling price originally placed on the merchandise. • **Keystone markup:A markup equal to the cost of the merchandise. Double it*** • Keystoning:Doubling the cost of the merchandise to arrive at the retail price. (***you do the math)

14. ***Maintained markup:The difference between the total cost of the merchandise and its final selling price. • Markdown: ***Used to stimulate sales, dispose of slow moving/discontinued merchandise, meet competitors’ prices, and increase customer traffic. • ****The most common type of retail price change

15. Markup:An amount added to the cost of goods to reach a selling price. • Net profit: Gross profit minus total operating expenses. • Net sales: The revenue generated from sales minus sales returns and allowances. • ***Retail Price:The price the customer pays for the merchandise. • Sales income: The money made from sales minus returns.

16. ***Basic Markup Calculations(know all of them) • When cost and dollar markup are known… Retail Price (RP) = Cost (C) + Markup (MU) • Example: Retail Price (RP)=$55.00 (C) + $45.00 (MU) Retail Price (RP) = $100.00

17. When retail price and markup are known… Cost (C) = Retail Price (RP) – Markup (MU) Example: Cost (C) = $100.00 (RP) - $45.00 (MU) Cost (C) = $55.00

18. When retail price and cost are known… Markup (MU) = Retail Price (RP) – Cost (C) • Example: Markup (MU) = $100.00 (RP) - $55.00 (C) Markup (MU) = $45.00

19. Markup percent based on retail price • Used by most department and fashion specialty stores • Markup % (MU%) = Markup (MU) ÷ Retail Price (RP) • Example: Markup % (MU%) = [$200 (RP) - $105 (C)] ÷$200 (RP) Markup % (MU%) = $95 (MU) ÷ $200 (RP) Markup % (MU%) = .475 or 47.5%

20. Markup percent based on cost • Used by some small businesses • Markup % (MU%) = Markup (MU) ÷ Cost (C) • Example: Markup % (MU%) = [$210 (RP) - $120 (C)] ÷$120 (C) Markup % (MU%) = $90 (MU) ÷ $120 (C) Markup % (MU%) = .75 or 75% • ***Know how to change a % to decimal.

21. Reasons for ***Marking Down Retail Price Buying errors Pricing errors Special sales Broken assortments Reduction of goods in stock

22. Calculate Markdown(***know how to calculate) Markdown (MD) = Retail Price (RP) X Markdown percentage (MD%) • Example: Markdown (MD)=$195.00 (RP) X 30% (MD%) Markdown (MD) = $58.50

23. The “New” Retail Price (after a markdown is taken) = Original retail price (RP) – Markdown (MD) Example: “New” Retail Price (RP) = $195 (RP) - $58.50 (MD) “New” Retail Price (RP) = $136.50

24. Markdown Percentage • Calculated for a specific time period • Expressed as a percentage of net sales, which cannot be calculated until the merchandise is sold • Used in planning and forecasting Markdown % (MD%) = Dollar Markdown (DMD) ÷ Net Sales (NS) Example: Markdown % (MD%) = $10,000 (DMD) ÷ $550,000 (NS) Markdown % = .01818 or 1.8%