Kinh tế học - Chapter 8: Markups and markdowns: perishables and breakeven analysis

Chapter 8Markups and Markdowns: Perishables and Breakeven AnalysisCalculate dollar markup and percent markup on costCalculate selling price when you know cost and percent markup on costCalculate cost when dollar markup at percent markup on cost are knownCalculate cost when you know the selling price and percent markup on costMarkups and Markdowns; Perishables and Breakeven Analysis#8Learning Unit ObjectivesMarkup Based on Cost (100%)LU8.1Calculate dollar markup and percent markup on selling priceCalculate selling price when dollar markup and percent markup on selling price are knownCalculate selling price when cost and percent markup on selling price are knownCalculate cost when selling price and percent markup on selling price are knownConvert from percent markup on cost to percent markup on selling price and vice versa#8Learning Unit ObjectivesMarkup Based on Selling Price (100%)LU8.2Markups and Markdowns; Perishables and Breakeven AnalysisCalculate markdowns; compare markdowns and markupsPrice perishable items to cover spoilage loss#8Learning Unit ObjectivesMarkdowns and PerishablesLU8.3Markups and Markdowns; Perishables and Breakeven AnalysisCalculating Contribution Margin (CM)Calculating a Breakeven Point (BE)#8Learning Unit ObjectivesBreakeven AnalysisLU8.4Markups and Markdowns; Perishables and Breakeven AnalysisTerminologySelling Price - The price retailers charge customersCost - The price retailers pay to a manufacturer or supplierMarkup, margin, or gross profit - The difference between the cost of bringing the goods into the store and the selling priceOperating expenses or overhead - The regular expenses of doing business such as rent, wages, utilities, etc.Net profit or net income - The profit remaining after subtracting the cost of bringing the goods into the store and the operating expensesBasic Selling Price FormulaSelling price (S) = Cost (C) + Markup (M)$23Jean$18 - Pricepaid to bring Jeansinto store$5 - Dollars tocover operating expenses and make a profitMarkups Based on Cost (100%)Cost + Markup = Selling Price100% 27.78% 127.78%Cost is 100% - the BaseDollar markup is the portionPercent markup on cost is the rateCalculating Dollar Markup and Percent Markup on CostGap buys fleece jacketsfor $18. They plans to sell them for $23. What is Gap’s markup? What is the percent markup on cost?Dollar Markup = Selling Price - Cost $ 5 = $23 - $18Percent Markup on Cost = Dollar Markup Cost $5 = 27.78%$18 Check: Selling Price = Cost + Markup23 = 18 + .2778(18)$23 = $18 + $5Cost (B) = Dollar Markup Percent markup on cost $5 = $18 .2778Calculating Selling Price When You Know Cost and Percent Markup on CostMel’s Furniture bought a lamp for $100. To make Mel’s desired profit, he needs a 65% markup on cost. What is Mel’s dollar markup? What is his selling price?S = C + MS = $100 + .65($100)S = $100 + $65S = $165Dollar MarkupCalculating Cost When You Know Selling Price and Percent Markup on CostJill Sport, owner of Sports, Inc., sells tennis rackets for $50. To make her desired profit, Jill needs a 40% markup on cost. What do the tennis rackets cost Jill? What is the dollar markup?S = C + M$50 = C + .40(C)$50 = 1.40C1.40 1.40$35.71 = CM = S - CM = $50 - $35.71M = $14.29Markups Based on Selling Price (100%)Cost + Markup = Selling Price 78.26% + 21.74% = 100%Selling Price is 100% - the Base (B)Dollar ($) markup is the portion (P)Percent (%) markup on selling price is the rate (R)Calculating Dollar Markup and Percent Markup on Selling PriceThe cost to Gap for a hooded fleece jacket is for $18; the store then plans to sell them for $23. What is Gap’s dollar markup? What is its percent markup on selling price?Dollar Markup = Selling Price - Cost $ 5 = $23 - $18Percent Markup on Selling Price = Dollar Markup Selling Price $5 = 21.74%$23 Check: Selling Price = Cost + Markup23 = 18 + .2174($23)$23 = $18 + $5 $5 = $23 .2174Selling Price = Dollar Markup Percent markup on SPCalculating Selling Price When You Know Cost and Percent Markup on Selling PriceMel’s Furniture bought a lamp for $100. To make desired profit, he needs a 65% markup on selling price. What are Mel’s selling price and dollar markup? M = S - CM = $285.71 - $100M = $185.71S = C + MS = $100 + .65(S)-.65s - .65S .35s = $100.35 .35S = $285.71Calculating Cost When You Know Selling Price and and Percent Markup on Selling PriceJill Sport, owner of Sports, Inc., sells tennis rackets for $50. To make her desired profit, Jill needs a 40% markup on selling price. What is the dollar markup? What do the tennis rackets cost Jill?S = C + M$50 = C + .40($50)$50 = C + $20-20 - $20$30 = CDollar MarkupConversionFormula for Converting Percent Markup on Selling Price to Percent Markup on CostPercent markup on selling price1- Percent markup on selling price .2174 = 27.78% 1-.2174 Formula for Converting Percent Markup on Cost to Percent Markup on Selling Price Percent markup on cost 1+ Percent markup on cost .2778 = 21.74% 1+.2778 MarkdownsSears marked down a $18 tool set to $10.80. What are the dollar markdown and the markdown percent?$10.80$7.20$18.00 40%$18-$10.80MarkdownMarkdown percent = Dollar markdown Selling price (original)Pricing Perishable ItemsAlvin’s vegetable stand grew 300 pounds of tomatoes. He expects 5% of the tomatoes to become spoiled and not salable. The tomatoes cost Alvin $.14 per pound and he wants a 60% markup on cost. What price per pound should Alvin charge for the tomatoes?TC = 300lb. X $.14 = $42.00TS = TC + TMTS = $42 + .60($42)TS = $67.20300 lbs. X .05 = 15lbs$67.20 = $.24 285lbs. 300lbs. - 15lbsSelling Price per poundCalculating a Contribution Margin (CM)Assume Jones Company produces pens that have a selling price (S) of $2 and a variable cost (VC) of $.80. Calculate the contribution marginCM = $2,00 (S) - $.80 (VC)CM = $1.20Contribution margin (CM) = Selling Price (S) – Variable cost (VC)Calculating a Breakeven Point (BE)Jones Company produces pens. The company has fixed cost (FC) of $60,000. Each pen sells for $2.00 with a variable cost (VC) of $.80 per pen.Breakeven point (BE) = Fixed Costs (FC) Contribution margin (CM)Breakeven point (BE) = $60,000 (FC) = 50,000 $2.00 (S) - $.80 (VC)