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SECTION. 16-1. Markup. Compute: markup in dollars. Section Objective. Key Words to Know. cost The actual amount paid for a product, as opposed to its selling price, and which can include expenses such as freight charges and taxes. Key Words to Know. selling price
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SECTION 16-1 Markup
Compute: • markup in dollars Section Objective
Key Words to Know cost The actual amount paid for a product, as opposed to its selling price, and which can include expenses such as freight charges and taxes.
Key Words to Know selling price What a product actually sells for in the store, also called retail price. markup The difference between the cost of a product and the selling price when the selling price is higher.
Key Words to Know gross profit The amount of money a supplier makes on a product when it sells it for more than cost. net profit Any money left after expenses have been deducted from gross profits, also called net income.
Formula Markup = Selling Price – Cost
Do Now Discount Electronics purchased TV/DVD sets for $187.83 each. Discount Electronics sells the TV/DVD sets for $299.99 each. What is the markup on each TV/DVD?
Do Now- Answer Step: Find the markup. Selling Price – Cost $299.99 – $187.83 = $112.16
Assignment Workbook p.113
SECTION 16-2 Markup Rate
Calculate: • markup as a percent of the selling price Section Objective
Key Words to Know markup rate The markup on an item expressed as a percent of its selling price.
Formula Markup Rate = Markup ÷Selling Price
Do Now Roy’s Florist buys roses for $10.99 a dozen. It sells them for $18.95 a dozen. What is the markup based on the selling price?
Do Now Answer: Step 1 Find the markup. Selling Price – Cost $18.95 – $10.99 = $7.96
Do Now Answer: Step 2 Find the markup rate based on the selling price. Markup ÷ Selling Price $7.96 ÷ $18.95 = 0.420 or 42%
Do Now 2 A ⅜-inch drill kit sells for $59.99. The cost of the drill kit to the store is $29.00. Find the markup as a percent of the selling price.
Do Now 2 Answer: Step 1 Find the markup. Selling Price – Cost $59.99 – $29.00 = $30.99
Example 2 Answer: Step 2 Find the markup as a percent of the selling price. Markup ÷Selling Price $30.99 ÷ $59.99 = 0.5165 or 51.2%
ASSIGNMENT Workbook p.114
SECTION 16-3 Net Profit
Figure out: • net profit in dollars Section Objective
Key Words to Know operating expenses The costs of running a business, such as salaries, rent, utilities, and taxes, also called overhead.
Formulas How do I calculate overhead expenses? Overhead = Selling Price × Overhead Percent How do I calculate the net profit? Net Profit = Markup – Overhead
Do Now Sport Shop purchases water tubes for $44.98 each. It sells the tubes for $89.99 each. The owner estimates the overhead expenses to be 40 percent of the selling price of the merchandise. What is the net profit on each tube?
Do Now Answer: Step 1 Find the markup. Selling Price – Cost $89.99 – $44.98 = $45.01
Do Now Answer: Step 2 Find the overhead. Selling Price × Overhead Percent $89.99 × 40% = $35.996 or $36.00
Do Now Answer: Step 3 Find the net profit. Markup – Overhead $45.01 – $36.00 = $9.01
Do Now 2 Anamarie’s Shoppe buys shirts at a cost of $12.78. Anamarie’s sell the chemises at a selling price of $24.49. Its management estimates the overhead expenses to be 34 percent of the selling price of the merchandise. What is the net profit on each shirt sold?
Example 2 Answer: Step 1 Find the markup. Selling Price – Cost $24.49 – $12.78 = $11.71
Example 2 Answer: Step 2 Find the overhead. Selling Price × Overhead Percent $24.49 × 34% = $8.3266 or $8.33
Do Now 2 Answer: Step 2 Find the net profit. Markup – Overhead $11.71 – $8.33 = $3.38
SECTION 16-4 Net-Profit Rate
Find out: • net profit as a percent of the selling price Section Objective
Key Words to Know net-profit rate The net profit on an item expressed as a percent of the selling price.
Formula Net-Profit Rate = Net Profit ÷Selling Price
Do Now Giant Discounts sells a vacuum cleaner for $49.99. The cost of the vacuum cleaner to Giant Discounts is $23.74. Giant estimates the overhead expenses on the vacuum to be 30 percent of the selling price. What is the net-profit rate based on the selling price of the vacuum cleaner?
Do Now Answer: Step 1 Find the net profit. Markup – Overhead ($49.99 – $23.74) – ($49.99 × 30%) $26.25 – $15.00 = $11.25
Do Now Answer: Step 2 Find the net-profit rate. Net Profit ÷Selling Price $11.25 ÷$49.99 = 0.2250 or 22.5%
Do Now 2 A robot transformer costs the Toy Store $7.85. It has a selling price of $16.96. The store estimates overhead at 28 percent of the selling price. Find the net-profit rate based on the selling price.
Do Now 2 Answer: Step 1 Find the net profit. Markup – Overhead ($16.96 – $7.85) – ($16.96 × 28%) $9.11 – $4.75 = $4.36
Do Now 2 Answer: Step 2 Find the net-profit rate. Net Profit ÷Selling Price $4.36 ÷$16.96 = 0.2570 or 25.7%
SECTION 16-5 Determining Selling Price— Markup Based on Selling Price
Calculate: • selling price of an item based on the cost and markup rate Section Objective
Formula Selling Price = Cost ÷Complement of Markup Rate
Do Now VJ’s Sporting Goods Store aims for a markup that is 40 percent of the selling price of its merchandise. The store received a shipment of running shoes at a cost of $38.99 per pair. What is the minimum selling price the store should charge?
Do Now (cont.) Sales for Month: $42,000 Percent of Total Sales Cost of goods sold 25,200 60% Overhead expenses 8,400 20% Profit 8,40020% TOTAL $42,000 100% (Note: Markup plus cost equals selling price. If the markup is 40 percent of the selling price, then the cost must be 60 percent of the selling price. Sixty percent is the complement of 40 percent.)
Do Now Answer: Step 1 Find the complement of the markup rate. 100% – 40% = 60%
Do Now Answer: Step 2 Find the selling price. Cost ÷Complement of Markup Rate $38.99 ÷60% = $64.98
Do Now 2 Circuit Town purchased some digital cordless phones for $31.99. Its markup policy is 20 percent based on the selling price. What is the selling price of the phones?
