Reference no: EM132540766

This year, the buyer of the dress department hopes to increase annual profits (which were 2.5% of net sales, last year) from $10,000 last year to $20,000 this year. The operating expenses are anticipated to increase from 25% last year to 28% this year. The total retail reductions are planned at 16% this year which is the same as last year. Although there were no cash discounts earned last year, the buyer anticipates that this year, she will earn cash discounts of 2% (of net sales) from her vendors. No alteration costs are planned for this year, the same as last year.

Question (a) What was last year's initial markup%?

Question (b) What initial markup% should be planned for this year to achieve the buyer's increased profit goal given that $net sales this year will be the same value as last year?