Reference no: EM133430629

Chapter 15: Pricing the Merchandise

1. Assume that a retailer plans sales of $100,000 with a planned profit of $5,000. Reductions (including markdowns) are planned at $10,000. Expenses are planned at $30,000. Calculate the initial markup percentage.

2. Assume that a retailer plans sales of $1,000,000 with a planned profit of $60,000. Reductions (including markdowns) are planned at $95,000. Expenses are planned at $300,000. Calculate the initial markup percentage.

3. Assume that a retailer plans sales of $250,000 with a planned profit of $15,000. Reductions (including markdowns) are planned at $25,000. Expenses are planned at $75,000. Cash discounts that the store plans to receive total $15,000. Calculate the initial markup percentage.

4. Assume that a retailer plans profit of 6%. Reductions (including markdowns) are planned at 15%. Expenses are planned at 32%. Calculate the initial markup percentage.

5. Assume that a retailer plans a profit of 7.5%. Reductions (including markdowns) are planned at 16.3%. Expenses are planned at 33.1%. Calculate the initial markup percentage.

6. At a 41.1% markup, expenses are estimated at $15,000. Reductions are anticipated to be $5,200. If sales are planned at $50,000, estimate profit.

7. At a 48% markup, expenses are estimated at 35%. Reductions are anticipated to be 8%. Calculate the sales that would be needed to achieve the markup goal. Remember, when using percentages in this formula, sales will always be 100% (as a decimal it would be 1.00).

8. At a 48% markup, expenses are estimated at $20,000. Reductions are anticipated to be $4,000, and profit is estimated at $5,000. Calculate the sales that would be needed to achieve these goals.

9. With the initial markup percentage, retail buyers can calculate the retail price for merchandise as it enters the store. A department uses a 51.5% initial markup percentage. Calculate the retail price that would be placed on items costing (a) $5.00, (b) $24.00, and (c) $16.50.

10. Assume 1000 ties were originally purchased at $10 each and marked to sell for $20 each. At the end of the season, 100 ties remained in stock. The other 900 sold at the established retail price. The remaining ties were marked down to $15, and all of them sold. Based on the total purchase, calculate (a) the total markdown in dollars and (b) the markdown percentage.