Basic Markdown

RETAIL PRICING AND REPRICING OF MERCHANDISE (MARKDOWN)

A Basic Markdown Percentage Equations

1. Calculating Markdown % on Retail Using the Retail Method of Inventory

Markdown % $Markdown retail Markdown %

2. Calculating Markdown % on Cost

Markdown % $ Markdown cost Markdown %

3. Calculating Markdown % when cost and retail are known a. when individual cost and individual retail are known

individual retail - individual cost $ Markdown Markdown %

b. when total purchase cost and total purchase retail are known

total retail - total cost $ Markdown on entire purchase Markdown %

4. Calculating Markdown % on a group of items with varying costs or retail prices i.e. order writing

Item A Item B Item C Item D Total

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Markdown %

5. Calculating Markdown % with varying retail prices that have the same cost Merchandise portion A portion B portion C total

Markdown% on entire purchase

6. Calculating Markdown % on merchandise with varying costs at the same retail price

Merchandise A Merchandise B Merchandise C total

Markdown % on enitre purchase

B Basic $ Markdown Calculations Used in Buying Decisions 1. Finding Retail when Cost and Markdown % are Known

retail cost Markdown %

2. Finding Cost when Retail and Markdown % are known

cost retail Markdown % cost

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$0.00

$0.00

$ cost $ retail $Markdown

$0.00 $0.00 $0.00

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no. pieces unit cost total cost unit retail total retail Markdown same $0.00 same $0.00 same $0.00

0 same $0.00

no.pieces unit cost total cost unit retail total retail Markdown $0.00 same $0.00 same $0.00 same $0.00 same

0

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REPRICING OF MERCHANDISE MARKDOWN

1. The men’s shirts buyer for a department store is taking a markdown on short sleeve denim shirts for Father’s Day. All $89.00 shirts will be markdown to $59.99. Calculate the markdown dollars for the shirts.

Regular Price - Markdown Price =

$89.00 $59.99

2. The bedding buyer is running a promotion on sheet sets for a back-to-school sale. All twin-sized sheet sets will be promoted at 25% off. The sheet sets regularly retail at $75.00. What are the markdown dollars and the new retail price for the sheet sets? Regular Price x % off =

$75.00 25.0%

3. Fill in the blanks for parts (a)–(d) in the following table: Regular Price - Markdown Price =

a. $40.00 $19.99 b. $149.00 $109.99 c. $299.00 $249.98 d. $74.99 $29.95

Planned and Actual Markdown

4. For November, a suit buyer took markdowns totaling $24,700. During this month, the net sales for the department amounted to $50,000. What was the markdown percentage for November?

MD $ Net Sales $ $24,700 $50,000

5. If the girls’ department's actual spring season sales were $69,000, and the actual markdown percentage was 29.5%, calculate: a. The actual markdown dollars for the fall season in the girls' departmentNet Sales $ MD %

$69,000 29.5%

b. If the planned markdown dollars for fall in the girls’ department was $19,000, is the buyer over or under the markdown plan?

Planned Actual $19,000 $17,405

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Compounding of Markdown

6. The entire stock of $99.00 activewear bottoms will be promoted during Thanksgiving weekend as a POS promotion at 40% off. There will be a coupon in the paper for an additional 10% off. If the customer uses the coupon, calculate:

a. The final selling price for the activewear. Regular Price x % off = $99.00 40.0%

b. The actual markdown % to the customer. Original Retail Price

New Retail Price

$99.00 $0.00

c.The markdown journalized by the retailer. Original Retail Price

New Retail Price

$99.00 $0.00

Point-of-Sale (POS) Markdown

7. The men’s tie buyer planned a Father’s Day promotion on ties. The POS price point promotion was $19.99. Here is what sold during the promotion: 40 ties with an original retail of $35.00; 50 ties with an original retail of $40.00. Calculate the following:

a. Total markdown in dollars for the promotion Original Retail Price

New Retail Price

$35.00 $19.99 $40.00 $19.99

b. Total sales dollars generated for the promotion New Retail Price Units Sold $19.99 40 $19.99 50

Total Sales $ =

c. Total markdown percentage for the tie promotion MD $ Retail Sales $0.00 $0.00

8. Permanent Markdown

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8.The men's sweater buyer bought V-neck linen sweaters to retail at $49.99. The buyer purchased 560 sweaters. At the full price, 140 pieces sold. A permanent markdown was taken to $39.99 and 120 pieces sold. Another permanent markdown was taken to $29.99 and 150 pieces were sold. Calculate the following:

First set up a Sell Down Chart: Units OH Beginning 560

Units Sold at Regular Price $49.99 140 Units OH to Perm to $39.99

Units Sold at $39.99 120 Units OH to Perm to $29.99

Units Sold at $29.99 150 Units OH balance

a. Total markdown $ for this sweater sale Retail Price New Retail Price

$49.99 $39.99 $39.99 $29.99

b. Total sales generated for the sweater sale New Retail Price Units Sold $49.99 140 $39.99 120 $29.99 150

Total Sales =

c. Total markdown % for the sweater sales MD $ Retail Sales $0.00 $0.00

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MD $

MD $ New Retail Price

MD $ x Units Sold = Total MD $ MD %

1,275 525 375 722

MD %

MD $

Under/Over spent

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MD $ New Retail Price x

Additional discount %

Additional discount $ Final selling price

10%

MD $ MD % to customer

MD $ MD % to journal

MD $ Units Sold Total MD $ 40 50

Total MD $ = Total Sales OR New Retail Price Units Sold Total Sales

$19.99 90

MD %

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MD $ Units OH Total MD $ $10.00 0 $10.00 0

Total MD $=

Total Sales

MD %

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Correct formula and answer

One or more formula errors Wrong formula or no formula

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