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4.03 Solve Related Mathematical Problems

Learn to balance cash drawers, calculate sales transactions, understand retail sales types, costing factors, pricing vs markup, and analyze profit using formulas and percentages.

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4.03 Solve Related Mathematical Problems

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  1. 4.03 Solve Related Mathematical Problems

  2. Opening Cash Fund • The opening cash drawer contains the coins and currency for the day’s business • The till is over if there is more money than planned • The till is short if there is less money than planned

  3. Balancing the Cash Drawer • At end of shift, the drawer must be balanced • The money must be counted and a balance report filled out

  4. Completing a Sales Transaction • The extension is the result of multiplying the number of units by the cost per unit • Add item amounts • Calculate sales tax and total

  5. Completing a Sales Transaction 2 running shorts at $32.50 each 3 pair of socks at $5 each Tax is 7.5% 2 x $32.50 = $65.00 3 x $ 5.00 = $15.00 $65.00 + $15.00 = $80.00 $80.00 x .075 = $6.00 $80.00 + $6.00 = $86.00

  6. Types of Retail Sales • Cash sales include cash or checks • Debit cards are bankcards or ATM cards – funds are withdrawn from the customers checking account • Visa, MasterCard, American Express, and Discover are examples of credit cards

  7. Cost of Merchandise Sold • The amount a retailer actually pays for merchandise • Determined by quoted wholesale cost, discounts, and transportation charges

  8. Factors Affecting the Cost of Merchandise Sold • Cost may be negotiable due to discounts and terms • Discounts – a reduction in the selling price offered by manufacturers and distributors to their customers to encourage prompt payment and stimulate purchasing • Allowances – free merchandise given by a manufacturer for large orders as a means of goodwill and to encourage future purchases

  9. Explain the Difference Between Pricing and Markup • Profit is the amount left from revenue (sales) after the costs of merchandise and expenses have been paid. Expenses include such things as rent, utilities, and salaries. • Markup is the difference between retail price and cost. In order for a business to be profitable, its markup must be high enough to cover expenses and maintain desired profit.

  10. Explain and Calculate Gross and Net Profit • Gross profit is a business’ income minus the cost of goods sold. • Income for is the total of all sales for the time period minus any sales returns and allowances • Cost of goods (merchandise) sold is the actual amount paid to the vendors for the merchandise • Net profit is what is left after all expenses have been paid by the business

  11. Calculate Retail Price • The most basic pricing formula is the one for calculating retail price when given cost and dollar markup RETAIL PRICE (RP)= COST(C) + MARKUP (MU) $500 = $300 + $200

  12. Calculate Cost and Markup • Formulas for cost and markup can easily be derived from the formula, RP=C+ MU. C= RP – MU MU= RP – C $300 = $500- $200 $200 = $500 - $300

  13. Calculate Markup Percentage • Markup percentage based on retail. When markup percentage is based on retail, retail price always equals 100 %. To determine markup percentage, divide dollar markup by retail price. MU% BASED ON RETAIL= DOLLAR MU / RP 40% = $200 / $500

  14. Calculate Markup Percentage continued . . . • Markup percentage based on cost. When markup percentage is based on cost, cost will always equal 100%. To determine markup percentage based on cost, divide dollar markup by cost. MU% BASED ON COST = DOLLAR MU / C 66.67% = $200 / $300

  15. Reasons for Markdowns • Buying errors. Wrong styles, color, sizes, materials, and/or quantities have been purchased. • Pricing errors. Initial price may be set too high, leading customers to a lower price competitor. • Special sales. Regular stock may be marked down for a special sales event, or a retailer may buy particular goods to sell at promotional prices.

  16. Calculate Markdowns • Markdowns are the most common type of price change. • Markdowns are used as a tool to stimulate sales, dispose of slow moving/discontinued merchandise, meet competitors’ prices and increase customer traffic. MARKDOWN (MD) = RETAIL PRICE X MD% $25 = $100 X 25%

  17. Find Markdown Percentage • Markdowns are expressed as a percentage of net sales and cannot be calculated until merchandise is sold. • Markdown percentages are usually calculated for a specific period of time rather than on individual items. MD%= DOLLAR MD / NET SALES 1.8%= $10,000 / $550,000

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