3-2 problem set

RETAIL PRICING AND REPRICING OF MERCHANDISE (MARKUP) Basic Markup Equations Used in Buying Decisions

A. Basic Markup Percentage Equations

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

Markup % $markup retail markup %

2. Calculating Markup % on Cost

Markup % $ markup cost markup %

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

individual retail - individual cost $ markup markup %

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

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

4. Calculating Markup % on a group of items with varying costs or retail prices (i.e., order writing)

Item A Item B Item C Item D Total markup %

5. Calculating markup % with varying retail prices that have the same cost

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Merchandise portion A portion B portion C total

markup% on entire purchase

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

Merchandise A Merchandise B Merchandise C total

markup % on enitre purchase

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

retail cost markup %

2. Finding Cost when Retail and Markup % are known

cost retail markup % cost

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$0.00

$0.00

$ cost $ retail $markup

$0.00 $0.00 $0.00

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

0 same $0.00

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

0

0

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RETAIL PRICING AND REPRICING OF MERCHANDISE (MARKUP)

1. If the men’s buyer purchases pants at a cost of $34.00 and has a markup of $33.00, what will be the retail price for each pair of pants? Cost

$34.00

2. If the electronics buyer purchases televisions at a cost price of $325.00 and the markup is $249.99, what is the retail price for the televisions?

Cost $325.00

3. The misses sweater buyer retails cotton sweaters for $45.99, and the markup is $24.24. What is the cost price of each sweater?

Retail

$45.99

4. A man’s belt retails for $74.00, and the markup is $43.00. What is the cost price? Retail

$74.00

5. Calculate the markup dollars for a tie if the cost is $23.60 and the manufacturer’s suggested retail price is $59.00. Retail

$59.00

6. If a necklace retails for $49.00 and the cost is $14.70, what is the markup in dollars and percentage at retail for the necklace? Retail

$49.00

7. If a pair of brand-name leather boots has a retail price of $249.00 and the cost is $125.00, what is the markup for the boots in both dollars and percentage at retail?

Retail $249.00

Markup Practice Problems Calculate the cost price given the retail and the planned MU %

8. A pair of sneakers will be ticketed with a retail price of $118.00 and the markup % is 54.0%. What is the cost price for the sneakers? Retail $

$118.00

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9. What is the maximum cost a buyer can pay for a coat that will sell for $550 with a markup of 56.0%?

Retail $ $550.00

10. You are the jewelry buyer for a large mass-market chain. For the holiday season, you are planning a boxed jewelry “Gifts to Go” promotion for $19.99. The markup for the promotion is planned at 43.0%. What is the maximum cost price that you will pay for the boxed jewelry?

Retail $ $19.99

11. Given the following departmental markups and average retails per department, what is the maximum cost that the buyer can pay? Retail $ a. Sneakers, 54.4% markup; Retail price $89.00. $89.00

b. Men’s ties, 65.7% markup; Retail price $38.00. Retail $ $38.00

c. Boy's apparel, 47.9% markup; Retail price $14.00 Retail $ $14.00

Calculate the retail price given the cost and the planned MU%

12. An eye shadow compact costs $25.20, and the markup is 40.0%. What is the retail price of the compact? Cost $

$25.20

13. A buyer will purchase sweaters at a cost of $37.85, and the planned MU % for the department is 62.0%. What is the minimum retail price for each sweater? What possible retail price for each sweater might be used if you were the buyer of a department store? What about an off-price retailer?

Cost $ $37.85

14. If a graphic T-shirt costs $8.95 and the MU % is 53.4%, what is the retail price for the T-shirt? What would the pricing strategy be? Cost $

$8.95

Cumulative Markup Practice Problems

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Description

15. A buyer purchased 50 assorted leather briefcases that cost $79.50 each and establishes retail prices based on the style as follows: • 15 zip-top briefcases to retail for $175 each. • 20 messengers to retail for $150 each. • 15 backpacks to retail for $125 each. Find the cumulative markup percentage on this purchase.

Zip Top Messenger

Backpack

MU $ = MU $ =

MU % = MU % =

16. The sweater buyer is buying 12,000 cashmere crew neck and 8,000 V- neck sweaters at a cost of $32.50. The buyer plans to retail the sweaters as follows: Crew neck to retail at $74.00; V-neck to retail at $79.00

a. Calculate the IMU $ and IMU % for the crew neck. Quantity 12,000

MU $= Retail -Cost MU $= MU %= MU $/ Retail $

b. Calculate the IMU $ and IMU % for the V- neck. 8,000

MU $= Retail -Cost MU $= MU %= MU $/ Retail $

c. Calculate the CMU % for the total buy. Total Cost CMU $ =Total Retail -Total Cost CMU %=CMU $/Total Retail $

Cumulative Markup Application Practice Problems

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17. The jewelry buyer wants to spend $25,000 at retail. The department maintains a 76.7% markup. The buyer needs a minimum of 600 pairs of earrings to cover each branch with an adequate assortment.

a. What should be the retail price per pair?

Retail Budget $25,000

b. What should be the cost per pair? Retail $25.00

18. For a monthly T-shirt buy, you will be spending $22,560 at retail. Orders for $9,980 at cost have been placed. The planned MU % is 51.5%. What is left in retail dollars for you to place? Cost

$9,980.00 Plan/Budget $22,560.00

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Markup Retail $33.00

Markup Retail $249.99

Markup Cost

$24.24

Markup Cost $43.00

Cost MU $ $23.60

Cost MU $ MU % $14.70

Cost MU $ MU % $125.00

Cost % Cost $

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Cost % Cost $

Cost % Cost $

Cost % Cost $

Cost % Cost $

Cost % Cost $

Mark Up Cost Retail $

Cost % Retail $ Pricing Strategies 0.38 Dept store: $

Off price retailer: $

Cost % Retail $ Pricing Strategies 0.47 $

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Quantity Unit Cost Total Cost

15 $79.50 20 $79.50 15 $79.50

TOTAL Total Retail -Total Cost

MU $/total retail $

Unit Cost Total Cost Unit Retail $32.50 $74.00

or

$32.50 $79.00

or

Total Retail CMU $ CMU %

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Units Retail Price 600

Cost % Cost Price

Cost % Retail Budget

Spent Over/Under

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Unit Retail Total Retail

$175.00 $150.00 $125.00

Total Retail

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Correct formula and answer One or more formula errors

Wrong formula or no formula

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