4.03 Solve Related Mathematical Problems

4.03 Solve Related Mathematical Problems

Opening Cash Fund • 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

Completing a Sales Transaction • The extension is the result of multiplying the number of units by the cost per unit • Add item amounts • Calculate sales tax and total

Completing a Sales Transaction 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

Types of Retail Sales • Cash sales include cash or checks • Debit cards are bankcards or ATM cards – funds are withdrawn from the customers checking account

Cost of Merchandise Sold • The amount a retailer actually pays for merchandise

Factors Affecting the Cost of Merchandise Sold • 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

Explain the Difference Between Pricing and Markup • 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.

Explain and Calculate Gross and Net 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

Calculate Retail Price • 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%

Calculate Cost and Markup • 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

Calculate Markup Percentage • 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

Calculate Markup Percentage continued . . . • To determine markup percentage based on cost, divide dollar markup by cost. MU% BASED ON COST = DOLLAR MU / C 66.67% = $200 / $300

Reasons for Markdowns • Buying errors. Wrong styles, color, sizes, materials, and/or quantities have been purchased.

Calculate Markdowns • 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%

Find Markdown Percentage • 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

4.03 Solve Related Mathematical Problems