Markups and Markdowns
Dora the Explorer DVD's were marked down from $19.99 to $12.99. Match the amounts to the terms.
$19.99- Original selling price (base) $7.00- Markdown dollar amount 35.02%- Markdown percent
Hai's Hardware sells snow shovels for $29.99. These are marked up 45% over cost. Match each value with the equation used to find it.
$20.68= $29.99/ 1.45 145%= 100% + 45% 100%= Base (cost) $9.31= $29.99- 20.68
Denton's Home Goods purchases carpets for $30. They must mark the carpets up 40% above cost. Identify each of the figures.
$30- Cost 40%- Percent markup 100%- Base (cost) $12- Dollar markup $42- Selling price
The Craft Cove originally sold bolts of flannel for $35/yard. On April 1 the flannel was marked down 5%. On May 1 it was marked down an additional 10%. On June 1 a final markdown of 25% was applied. Match the sales price per yard with the date indicated.
$35- March 31 $33.25- April 1 $29.93- May 1 $22.45- June 1
A couch costs $530.65 and is marked up 37% on selling price. What is the dollar markup?
Answer: $311.65 Equation: $530.65/ .63= $842.30 $842.30-530.65= $311.65
A couch costs $530.65 and is marked up 37% on selling price. What is the selling price?
Answer: $842.30 Equation: $530.65/ .63= $842.30
What is the selling price of an item that costs $100 and has a 40% markup based on cost? What is the selling price of an item that costs $100 and has a 40% markup based on selling price?
Selling price is $140 if markup is based on cost. Selling price is $166.67 if markup is based on selling price.
For each of the pricing model terms for percent markup based on selling price, match the respective percent formula terms.
Selling price- Base Dollar markup- Portion Markup percent- Rate
Match the pricing method terms to the respective definitions.
Selling price- The price retailers charge consumers. Cost- The price retailers pay to bring goods into the store. Markup- The difference between the cost and selling price. Operating expense- The regular costs of doing business Net profit- The sale of goods less the cost of bringing the goods into the store and the regular expenses.
Pricing perishable items is reserved for (short/long) shelf life goods.
Short
The percent markup on selling price is:
The dollar amount of markup divided by selling price
Johnson Company is considering investing in developing a new product line where there are existing competitors. They believe they can sell a product that is unique and will attract customers. They also believe that their selling price will cover all their variable and fixed costs, but are not sure how many units they will have to sell to earn a profit. They should first determine the (blank 1) (blank 2) before making this investment?
blank 1- breakeven blank 2- point
The basic markup equation holds that (blank 1) + markup= (blank 2) (blank 3)
blank 1- cost blank 2- selling blank 3- price
To calculate the dollar amount of a markup based on cost, you should multiply the (blank 1) of markup, shown as decimal, by the (blank 2).
blank 1- percent blank 2- cost
A garment with a retail price of $40 is marked down 10%. What is the amount of the markdown? What is the new sales price?
markdown: $4 New price: $36
Units that are damaged, lost, or for some reason are no longer salable, are called what?
perishables
A product that cost $100 has a markup of 40%. Verify that the final selling price is $140 by using the 1+ markup percent.
$100 x (1+.4)= $140
A coat sold for $100, which included a 40% markup on cost. What equation is used to compute cost?
$100/(1+.40)= $71.43
Baby Gap purchases sundresses for $12 and sells them for $18 after marking them up based on cost. Match the figure to the term.
$12- Cost $6- Dollar markup $18- Selling price 50%- Percent markup 100%- Base (Cost)
Mel's purchases tables for $230. They must mark up the tables 40% on selling price. Identify each of the figures.
$230- Cost $383.33- Selling price $153.33- Markup 40%- Markup on selling price 60%- Complement of the markup
If selling price is $100 and markup based on selling price is 40%, what is the dollar markup? What is the cost?
$40; $60 $100 x .4= $40 markup $100 x .6= $60 cost
Assuming a markup of 30% and selling price of $100, compare cost based on selling price to cost based on cost. Which one is always going to show a higher cost?
1. Cost based on cost: $76.92 2. Cost based on selling price: $70 3. Cost based on cost will always be a higher number.
Percent markup based on cost is 40%. Convert to percent markup on selling price. (Round to nearest tenth of a percent.)
28.6% Percent Markup on Cost/ 1 + Percent markup on cost
Fintel produces dry erase markers that have a selling price of $2.35 and a variable cost of $.70. The contribution margin is:
Answer: $1.65 Equation: $2.35- $.70= $1.65
Debra's Design pays $32 for designer lamps and marks them up 50% on cost. What is the dollar amount of the markup?
Answer: $16 Equation: $32 x .5= $16
If the breakeven point is 20,000 and the contribution margin is $1.30, how much are fixed costs?
Answer: $26,000 Equation: Using the formula FC/CM= BE, then BE x CM- FC. 20,000 x $1.30= $26,000
Debra's Design pays $32 for designer lamps and marks them up 50% on cost. What is the selling price?
Answer: $48 Equation: $32 x 1.5= $48
Weston's Hardware sells picnic table sets for $498. After marking them up $183 based on selling price, what is the markup percent?
Answer: 36.75% Equation: The markup percent is found by dividing the markup by the base. $183/ $498= .36746 rounded to 36.75%
Fintel produces dry erase markers that have a selling price of $2.35 and a variable cost of $.70. Fixed costs are $82,500. What is the breakeven point?
Answer: 50,000 Equation: $82,500/$1.65= 50,000
The Gap purchases dress shirts for $23 and sells them for $38. The percent markup based on cost is (rounded to the tenth):
Answer: 65.2% Equation: Markup rate= markup/ base (cost). $15/ $23= 652 converted to 65.2%
For each of the pricing model terms for markup based on cost, match the respective percent formula terms.
Cost- Base Percent Markup- Rate Dollar markup- Part
Match the equation used to find the missing variable Cost Markup Selling Price
Cost= selling price - markup Markup=selling price - cost Selling price= cost + markup
A (blank) represents a decrease in sales price offered to the customer. It is a reduction from the original sales price.
Markdown
A markup is an amount that is represented by which of the following statements?
Markup is an additional amount (portion) added to a base amount which represents the gross profit or earnings on sales of products
Jim believes his cost was $135; his selling price was $180 which represented a 25% markup on cost. Using the formula to calculate cost when you know selling price and percent markup on cost, verify the accuracy of his answer (cost is $135).
No, his cost is $144 Equation: 180/ 1.25= $144
True or False: To calculate the dollar amount of the markup, you are solving for Portion in the formula: Portion= Base x Rate.
True
When good are lost to spoilage, the merchant calculates a new sales price based on:
profits that would have occurred without the spoilage
To convert markup on selling price to amount of markup, you should first:
subtract the markup % on selling price from 1.
Order the perishable pricing steps
1. Calculate total cost 2. Calculate total dollar markup 3. Calculate total selling price 4. Calculate loss/ spoilage 5. Calculate selling price per unit
Jan's Sports sells road bicycles for $1,300. This is a 25% markup on cost. Match the values with the related terms.
$1040- Cost price ( equation: $1300/ 1.25=1040) 100%- Cost (base) 125%- Selling percent (equation: 100% + 25%=125%) $260- Markup dollar amount (equation: $1300- $1040= $260)
Kaylee's Kids Sports sells soccer balls for $18. They must mark up the balls 32% on selling price to make a profit. Identify each of the figures.
$12.24- Cost (equation: .68 x $18= $12.24) $5.76- Markup dollar amount ( equation: $18 x .32= $5.76) 68%- Complement of the markup (equation: 100% - 32%= 68%) 100%- Selling price