Funeral Management 3.3
What is meant on a invoice that says "3/15 N/45" as the terms of a credit sale?
3% discount if the bill is paid within 15 days, and if the customer forfeits this opportunity, they must pay the full amount within 45 days. (Percentage, Days to pay, Days for full amount)
What is the purpose of a cash discount?
A deduction allowed by a seller of goods or provider of services in order to motivate the customer to pay within a specified time.
What is a quartile?
A division of the total into four intervals, each one representing one-fourth of the total. (3 months out of a year = 1 quarter)
Functional pricing?
A method of price quotation by which the charges are broken down into several major component parts, such as professional service, facilities, automobile, and merchandise.
Bi-unit pricing.
A method of price quotation showing separately the price of the service to be rendered and the price of the casket.
Define the concept of unit pricing.
A method of price quotation which creates one total price package for both service and merchandise.
Define and describe the Graduated Recovery pricing structure.
A pricing method where the markup varies, generally increasing as the wholesale cost increases.
Package pricing.
A pricing method which groups together selected services and/or merchandise.
How does the concept of consignment work?
A trading arrangement in which a seller sends goods to a buyer or reseller who pays the seller only when the good are sold. The seller remains the owner of the goods until they are paid for in full, and, after a certain period, may take back the unsold goods.
Median
A value in an ordered set of values which represents the midpoint, whereby there are an equal number of values above and below the midpoint value.
Quantity discount
An incentive offered to a buyer that results in a decreased cost per unit of goods or materials when purchased in greater numbers.
Fixed Multiple pricing structure. (Times Factor)
Casket cost is multiplied by a constant factor. (Wholesale Casket price) x ( Markup %) $1500 X 300% = $4500 (Retail Price)
Which pricing structure generally creates the best CVI?
Declining Price Structure
Compare and contrast the Declining Price structure with the Modified Declining Price structure.
Declining Price- Higher Cost is given a lower markup % Modified Declining- Merchandise with lower cost is priced so it is less expensive.
What are the benefits to a funeral home that uses a consignment arrangement?
Eliminated the concern of aging inventory. Saves money that must be spent to maintain inventory.
Which pricing structure generally creates the least favorable CVI?
Graduated Recovery
Age of inventory
Measures the average time required to sell inventory.
What is a potential drawback of the Fixed Multiple pricing structure?
No improvements in CVI No incentive to buy up.
25 urns x $75 = $1875 Less 4%, 1875 x .04 = (75) $1875 - $75 = $1800 for 25 urns $1800/25 = ($72 per urn) 40 urns x $75 = $3000 Less 8%, 3000 x .08 = (240) $3000 - $240 = $2760 for 40 urns $2760/40 = ($69 per urn)
Patterson Funeral Home is adding a cremation merchandise display to their selection room. They are offered a price discount of 4% from the urn vendor if they purchase 20-29 urns and an 8% discount if they purchase 30 or more of the same urn. If Patterson Funeral Home purchases 25 urns at a standard cost of $75 each, how much will they pay per urn? What would the price-per-unit be if they purchase 40 urns?
$22,000 X .02 (2%) = $440 $22,000 - $440 = $21,956
Patterson Funeral Home purchases $22,000 worth of caskets from their vendor. They receive a bill that states 2/14/N/30. How much will they save if they pay the bill within 10 days? For what amount would they then write the check to the casket vendor?
How is Consumer Value Index figured? (CVI)
Percentage derived by dividing the wholesale amount of the merchandise by the retail price of the merchandise. Wohlesale Cost / Retail Price = CVI
Declining Price structure
Pricing method where there is an inverse relationship between the markup and the wholesale cost of the merchandise. Higher cost merchandise is given lower markup. Wood Casket: $750 x 400% = $3000 Copper Casket: $2300 x 300% = $6900
Define the concept of price determination.
Refers to how a funeral home will markup merchandise it sells to the public.
Markup
The difference between merchandise cost and selling price.
Wholesale cost.
The list price a funeral home normally pays for a casket (or other merchandise) from the manufacturer.
Itemization?
The method of price quotation by which each unit of service and/or merchandise is priced separately.
Sales frequency
The number of sales of various products and/or services during a fixed period of time.
Inventory turnover.
The number of times the average inventory has been sold or used up (i.e. turned over) during a period.
Mode
The number that occurs most frequently in a listing of numbers.
Economic Order Quantity(EOQ)
The quantity to be purchased which minimizes total costs.
Rebate
The return of part of the original payment for some good or service or a partial refund.
Demographics
The statistical study of human populations with respect to their size, density, distribution, composition, and income.
Mean (Average)
The sum of a group of numbers divided by the number of units.
How is the economic base of a community defined?
The wealth produced in or near a community that provides employment and income to the local population.
Inventory
Those goods or stock of goods which are held for resale; aka Merchandise.
How is the Merchandise Value Ratio figured? (MVR)
Wholesale cost of merchandise divided by the total cost of both service and merchandise to the consumer. Wholesale Cost / Service & Merchandise = MVR
$335.30
Your county requires you to charge 7% sales tax on all merchandise sold. Figure the sales tax on the following bill: Service fee: $4995 Casket: $2895 Outer container: $1595 Clergy honorarium: $150 Memorial folders: $300 Obituary fee: $650
By what other names is the Fixed Multiple pricing structure known?
straight line, balance line, times factor.
