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working on a class excel sheetFormulasUNIT III THE RELATIONSHIP OF MARKUP TO PROFITI TYPES OF MARKUPA. Initial Markup Concepts

working on a class excel sheet

Formulas

UNIT III THE RELATIONSHIP OF MARKUP TO PROFIT
I TYPES OF MARKUP
A. Initial Markup Concepts
dollars%
original or first retail price
billed cost of merchandise
initial markup0ERROR:#DIV/0!
estimated expenses
price reductions
profit
initial $ markup0
planned sales
price reductions
original retail price0
markup
original retail price
initial markup %ERROR:#DIV/0!
B. Calculating Initial Markup
1. finding initial MU% when gross margin % and retail reduction % are known
gross margin %
retail reductions %
sales (100%)100.00%
initial markup %0.00%
2. Finding initial MU % when gross margin and retail reductions in $ are known
gross margin $
retail reductions $
sales $
initial markup $ERROR:#DIV/0!
3. Finding initial MU% when cash discounts and alteration costs are known
gross margin %
alteration costs %
cost discount earned %
retail reductions%
sales %100.00%
initial markup %0.00%
C. Cumulative Markup
cumulative markup $
cumulative retail $
cumulative markup %ERROR:#DIV/0!
costretailmarkup %
Opening inventory0$0.00
Purchases STD0$0.00
Total Merchandise Handled0$0.00
cumulative markup0
cumulative markup%ERROR:#DIV/0!
D. Maintained Markup
GROSS MARGIN CALCUATIONcostretailMAINTAINED MARGIN CALCUATION
NET SALES$0.00NET SALES
cost of goods sold cost of goods sold
new purchases new purchases
inward freight inward freight
Total merchandise handled0 Total merchandise handled
closing inventory closing inventory
Gross Cost of Merchandise0Gross Cost of Merchandise
cash discounts earned
Net Cost of Merchandise Sold0
alteration/workman costs
Total Cost of Merchandise Sold0$0.00
GROSS MARGIN$0.00MAINTAINED MARGIN0
GROSS MARGIN %ERROR:#DIV/0!MAINTAINED MARGIN %ERROR:#DIV/0!
1. Finding Maintained MU when Initial MU and Retail Reductions are known
Initial Markup %
Retail Reduction %
Maintained Markup%0.00%
2. Finding Retail Reduction when Initial MU and Maintained MU are known
Initial Markup %
Maintained Markup %
Retail Reduction %0.00%

Problems

Module Five Basic Markup Equations Used for Merchandising Decisions
Correct formula and answer
Initial Markup ConceptOne or more formula errors
Wrong formula or no formula
1. A men’s swim buyer determines that the department has net sales of $875,000, expenses of $345,000, and total reductions of $95,000. This buyer also wants to attain a net profit of 4.5%. Find the initial markup percentage.
Net sales$875,000
Expenses$345,000
Reductions$95,000
Net profit-4.5%
IMU %
Calculating Initial Markup
2. A retailer in a boutique jewelry store has estimated expenses of 49%, markdowns at 15%, and stock shortage at 6.3%. A profit of 4% is desired. Calculate the initial markup percentage required.
Markdowns15.0%
Expenses49.0%
Shortage6.3%
Profit4.0%
IMU %
Cumulative Markup
3. A sleepwear buyer has an opening stock figure of $170,000 at retail, which carries a 61% markup. On March 31, new purchases since the start of the period were $990,000 at retail, carrying a 63% markup. Find the cumulative markup percentage on merchandise handled in this department to date.
CostRetailMU %MU $
Opening inventory$70,200$170,00061.0%
+ New Purchases$346,500$990,00065.0%
TMH
4. A belt department had an opening inventory of $86,000 at retail, with a 56.8% markup. Purchases during November were $63,000 at cost and
$142,000 at retail. Determine:
a. The cumulative markup percentageCostRetailMU %MU $
Opening inventory$37,152$86,00056.8%
New purchases$63,000$142,000
b. The markup percentage on new purchases
CostRetailMU $MU %
$64,000$142,000
Maintained Markup
5. A sporting goods store has an initial markup of 54.5%. The expenses are 34%. Markdowns are 12%. The cost of assembling bicycles and so on (e.g., workroom costs) is 6%, and shortages are 0.8%. What was the maintained markup percentage?
Initial markup54.5%
Expenses34.0%
Markdowns12.0%
Workroom costs6.0%
Shortages0.8%
Total Reductions
MMU %
6. The men’s shorts department buyer determined that the department’s initial markup should be 45.5%. The buyer also wanted to attain a maintained markup of 39%. Under this plan, what retail reduction (in percentage) would be allowed?
IMU %45.5%
MMU %39.0%
Net Sales %100.0%
Reduction %
Average Cost
7. A buyer plans to purchase 8,600 pairs of socks for a pre-Christmas sale. The unit retail price is planned at $7.50, and the markup goal for the purchase is 60%. The buyer purchases 4,400 pairs at the Sock Company showroom at a cost of $3.25 each.
a. What is the maximum total cost the buyer can pay for the balance of the total purchase?
UnitsRetailTotal RetailMU %Cost Purchases Planned
8,600$7.5060.0%
UnitsCost PlacedTotal Cost
4,400$3.25
Cost BalanceCost Balance
b. What will be the average cost per pair for the socks (4,200 socks) yet to be purchased?Unit BalanceCost BalanceAvg. Cost
4,200$0
8. A buyer who needs $10,000 worth of merchandise at retail for a housewares department has written orders for $2,875.50 at cost. The planned departmental markup percentage is 43.5%. How much (in dollars) is left to spend at cost?Cost PlannedRetail PlannedMU %
$10,000.0043.5%
Cost Placed
$2,875.50
Cost Balance
Average Retail Practice Problems
9. An dress buyer confirms an order reading as follows:
a. 165 maxi dresses costing $39 each
b. 85 tunics costing $28 each
If a retail price of $85 is placed on the maxi dresses, and a markup average of 55.5% is sought, what retail price must the tunics carry?
UnitsCostTotal CostMU %Total Retail Planned
Maxi155$39.00
Tuni85$28.00
55.5%
Retail PlacedTotal Retail
Maxi155$85.00
Retail BalanceRetailVarious Pricing Strategies (list at least two)
Tunic85
Average Markup
10. A suit buyer who plans sales of $95,000 at retail during April has an average markup goal of 54%. An order is placed with the B&C Sportswear Company for April delivery in the amount of $5,975 at cost and $12,500 at retail. What markup percentage must be made on the balance of the April purchases to achieve the planned markup?Retail PlannedMU %Cost PlannedMU $MU %
$95,00054.0%
B & C order placed$12,500$5,975

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