Problem Set Merchandising for Profit

Module Two: Merchandising for a Profit

I. DEFINING THE BASIC PROFIT FACTORS A. ELEMENTS OF BASIC PROFIT FACTORS 1. OPERATING INCOME: SALES

a. Gross Sales Quantity Price Total Item A 0 Item B 0 Item C 0 Gross Sales 0

b. Customer Returns and Allowances Total Total Quantity Price Time PD 1 Quantity Price Time PD 2

Return A 0 0 Return B 0 0 Return C 0 0 Allowance A 0 0 Allowance B 0 0 Allowance C 0 0 Total 0 0

Customer returns and allowances % Total returns Allowances Gross sales Returns allowances %

c. Net Sales Gross sales Returns/allowances Net sales 0

Dept Net Sales as a % of total store sales Net sales Customer returns and allowances % Gross sales % 0%

2. COST OF MERCHANDISE SOLD Billed cost Inward transportation Workroom costs Cash discount Total cost of merchandise 0

3. GROSS MARGIN Net sales Total cost of goods sold Gross margin 0

4. OPERATING EXPENSES Direct expenses

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Indirect expenses Total $ operating expenses 0

Operating expense $ Net sales $ Operating expenses %

5. OPERATING NET PROFIT Net sales Cost of merchandise sold Operating expenses Profit 0

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Total Returns + Allowances

0

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Module Two: Merchandising for a Profit

Operating Income (Gross Sales and Net Sales)

1. Return Percentages: Customer returns and allowances for Department #620 came to $5,500. Gross sales in the department were $100,000. What percentage of merchandise sold was returned?

Customer returns and allowances $5,500 Gross sales $100,000 Return Percentage

2. Net Sales $: If gross sales for Store A are $1,150,000 and reductions are $345,000, what are the net sales?

Gross sales $ $1,150,000 Reductions $ $345,000 Net sales $

3. Men's Store: If gross sales for Main Street Men's Store were $248,000 and the reduction % was 20%, calculate the following: a. The dollar amount of reductions b. The net sales

Gross Sales $248,000 Reduction % 20% Dollar amount of reductions Net sales men's store

4. Loungewear Department: After Mother's Day this year, the loungewear department had customer returns of 8.5%. The department's gross sales amounted to $835,380. As the buyer reviewed last year’s figures for the same period, the customer returns were 10.5%, with gross sales of $726,149.

Compute the department’s performance in dollars and percentages for this year and last year, with regard to gross sales, customer returns, and net sales.

LY % Loungeware net sales 89.5% Customer returns 10.5% Loungewear gross sales $726,149.00 100.0%

5.Towel Department Net Sales: The towel department represents 2% of total store sales, which are $3,500,000. What are the net sales planned for the towel department?

Total store sales $3,500,000

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% to total 2.0% Towel department net sales

6. Shoes/Sneakers Net Sales: Casual sneaker sales represent 4.5% and athletic shoe sales represent 8.2% of total store sales. If total store sales are $960,000, what are the dollar sales for each department?

Casual Sneakers Athletic Shoes Total store sales $960,000 $960,000 % to total 4.5% 8.2% Sneakers/shoes net sales

Cost of Goods Sold Practice Problems

7.Total Billed Cost: The girls’ buyer placed an order for the following merchandise:

150 sweaters with a billed cost of $7.75 each 175 knit tops with a billed cost of $4.50 each 250 leggings with a billed cost of $5.25 each

Calculate the total billed cost for this order.

# Units Billed cost Sweaters 150 $7.75 Knit Tops 175 $4.50 Leggings 250 $56.25 Total

8.Total Cost of Merchandise: A gift shop has workroom costs of $575. The billed cost of merchandise sold amounted to $59,000, with cash discounts earned of $1,180 and freight charges of $650. Find the total cost of the merchandise.

Billed cost Shipping Total Cost of Merchandise $59,000 $650 Gross Margin Practice Problems

9. Gross Margin: Calculate the gross margin in dollars and percentage for the home department if:

Net sales = $149,000 Billed cost of merchandise = $84,250

Cost discount=6.5% Shipping charges = $840

Billed Cost Cost Discount % COGS $84,250 6.50%

Net sales $149,000 COGS $0 Gross Margin Total Cost and Percentage

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Operating Expense Practice Problems

10. Total Expenses and Comparison of Sales: Analyze the following information:

TY Plan Net sales $485,000 $520,000

Advertising costs $82,000 $85,000 Salaries $94,000 $90,000

Find the following: a. What are the total expenses in $ and % for TY, Plan, and LY? TY Plan

Advertising costs $82,000 $85,000 Salaries $94,000 $90,000

Total expenses Total net sales $485,000 $520,000

Expense %

b. What is the comparison (build) of sales for TY versus Plan and TY versus LY? TY Plan

Net sales $485,000 $520,000 Build TY vs. Plan

Build TY vs. LY

Skeletal Profit and Loss Statements

Net sales $1,390,000 Gross margin $574,700

Profit $105,000 $ %

Net Sales Problem One $1,390,000 100.0% -COGS =GM $574,700 -Expenses =Profit/Loss $105,000

11.Skeletal Profit and Loss Statement: Set up skeletal profit and loss statement in both dollars and percentage given the information.

Gross margin $535,000 Gross margin 25%

Expenses $625,000

Net Sales Problem Two $2,140,000 100.0% -COGS =GM $535,000 25.0% -Expenses $625,000 =Profit/Loss

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TY % 91.50% 8.5%

$835,380.00 100.00%

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Total costs

Workroom costs Discounts Total cost $575 $1,180

Cost Discount $ Shipping COGS $840

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LY $450,000 $86,000 $91,000

LY $86,000 $91,000

$450,000

LY $450,000

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Correct formula and answer One or more formula errors

Wrong formula or no formula

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