MOR 331 Funeral Home Management SG 3.3

What is meant on a invoice that says "3/15 N/45" as the terms of a credit sale?

3% discount if paid within 15 days Net amount due within 45 days

What is a quartile?

A division of the total into four intervals, each one representing one-fourth of the total.

What is itemization?

A method of price quotation by which each unit of service and/or merchandise is priced separately.

What is 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.

Define 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 the concept of price determination

A method used by management to establish the selling price for services and merchandise.

Define the Fixed Multiple pricing structure

A price determination method whereby the casket cost is multiplied by a constant factor; aka straight line, balance line, times factor.

What is the definition of a Declining Price structure?

A price determination method whereby the casket wholesale cost is multiplied by a factor that decreases as the wholesale cost increases; i.e. cheaper units are marked up by a higher factor than more expensive units.

Define and describe the Graduated Recovery pricing structure

A pricing method where the markup varies, generally increasing as the wholesale cost increases.

Define 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.

How is median defined?

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.

What is a 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.

Compare and contrast the Declining Price structure with the Modified Declining Price structure

Both structures use decreasing factors to mark up caskets as the wholesale price increases; Modified Declining is basically the same as the Declining Price structure but the first unit (and possible second or third units) receive a slightly less aggressive markup.

What is a potential drawback of the Fixed Multiple pricing structure?

CVI does not change so there is no incentive for consumer to spend more money

Which pricing structure generally creates the best CVI?

Fixed Multiple

Which pricing structure generally creates the least favorable CVI?

Fixed Multiple

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?

For 25 they will pay $72 per Urn and for 40 they will pay $69 per Urn

What are the benefits to a funeral home that uses a consignment arrangement?

Less overhead for the Funeral Home

How is the Merchandise Value Ratio figured?

MVR = Wholesale Cost / Service Charge for Service + Casket Price

What is another term for the "average" and how is it figured?

Mean = The sum of a group of numbers divided by the number of units.

How is age of inventory defined?

Measures the average time required to sell inventory.

By what other names is the Fixed Multiple pricing structure known?

Straight Line

" Your county requires you to charge 7% sales tax on all merchandise sold. Figure the sales tax on the following bill: - Service Fee $4,995 - Casket $2,895 - Outer Container $1,595 - Clergy Honorarium $ 150 - Memorial Folders $ 300 - Obituary Fee $ 650

Tax only charged on goods not services so the tax is as follows Casket + Outer Container + Folders = Subtotal x Tax Rate = Tax Due or $2,895+$1,595+$300=$4,790x7%=$335.30

Define markup

The difference between merchandise cost and selling price.

Define wholesale cost

The list price a funeral home normally pays for a casket or other merchandise from the manufacturer.

What is the definition of sales frequency?

The number of sales of various products and/or services during a fixed period of time.

Define inventory turnover

The number of times the average inventory has been sold or used up, aka. turned over, during a period.

What is the mode?

The number that occurs most frequently in a listing of numbers.

What is meant by the term Economic Order Quantity?

The quantity to be purchased which minimizes total costs.

What is a rebate?

The return of part of the original payment for some good or service or a partial refund.

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?

They would save $440 so they would write the check for $21,560

What is the definition of inventory?

Those goods or stock of goods which are held for resale; aka Merchandise.

What is the purpose of a cash discount?

To inducement for prompt payment of an invoice.

How is Consumer Value Index figured?

by dividing the Gross Margin by the Retail Price then subtracting from 1