 Equals the difference between cost and retail price Retail Price = Cost + Markup Example: Cost = $18 Markup = $7 Retail Price =??? = $25 Markup = Retail Price – Cost Example: Retail Price = $199 Cost = $85 Markup = ??? = $114

 The markup percentage is based upon cost MUC% = $ Markup/Cost Example: Cost = $6 Markup = $4 Markup on Cost = $4/$6 or 67% Sample Problem Cost = $45 Markup = $23 MUC% = ??? = $23/$45 or 51%  Complete practice 2 problems on p. 486

 The markup percentage is based upon the retail price MUR% = $ Markup/Retail Price Example: Markup = $12 Retail Price = $28 MUR% = $12/$28 or 43% Sample Problem Cost = $33.50Markup = $26.75 MUR% = ??? = $26.75/$60.25 or 44.4%

Typical Markup Percentages based on Cost  Small Appliances30%  Large Appliances15-20%  Automobiles5-10%  Automobile Accessories15-25%  Clothing100%

 Uses product cost and markup on cost percentage to calculate the retail price  Two Step Formula: Step 1: Cost. MUC% = Markup $ Step 2: Cost + Markup $ = Retail Price Example: Cost = $45 MUC%= 35% Markup = or $15.75 Retail Price = $45 + $15.75 or $60.75

 One Step Formula: Cost. (1 + MUC%) Example: Cost = $45 MUC%= 35% Retail Price = $45. (1 +.35) = $ = $60.75 Practice Problem: Cost = $12.50 MUC% = 25% Retail Price = ??? = $ or $15.63

 Uses product cost and markup on retail percentage to calculate the retail price Often referred to as a “retail box” Formula: $ Cost (1 – MUR%) Example: Cost = $8 MUR% = 40% Retail Price = $8 / (1-.4) = $8 /.6 = $13.34  Complete Practice 4 problems on p. 489 Retail Price =

 A reduction in the retail price by a %; can be a discount or a sale  2 Step Formula: Step 1: Retail Price. Markdown % = Markdown $ Step 2: Sale Price = Retail Price – Markdown $ Example: Retail Price = $55 Markdown % = 20% Markdown $ = $55..2 or $11 Sale Price = $55 - $11 or $44

 The difference between an item’s final price and the cost.  Step 1: Calculate Sale Price Example: Retail Price = $48 Sale % = 15% Sale Price = $48 – (48..15) or $40.80  Step 2: Calculate Maintained Markup Cost = $21 MM$ = Sale Price – Cost = $ $21 or $19.80  Step 3: Calculate Maintained Markup % MM% = MM$/Sale Price = $19.80 / $40.80 or 48.5%  Complete Practice 6 problem on p. 491

 A discount is a reduction in the price of goods and services. Types include: Employee – given as an incentive to employees and to encourage employees to buy products Cash – given to buyers to encourage timely payment of bills. Example: 2/10, net 30 Trade – discounts given to wholesalers Quantity – price will vary based upon the quantity purchased. Example: 1-24 = $.95, = $.90, = $.85, 100+ = $.80 Seasonal – given to encourage customers to purchase merchandise out-of-season

 Cash Discounts Invoice Amount = $1,250Invoice Date = 4/2/-- Terms = 3/10, net 45 Check Date = 4/9/-- Check amount = ??? = $1,250. (1 – 3%) = $1, or $1,  Trade or Employee Discounts Retail Price = $129.95Discount = 15% Discount $ = $ or $19.49 Final Price = $ $19.49 or $ Alternate Method: $ (1- 15%) or $

 Quantity Discounts Quantity: Price:$1.49$1.42$1.35 Price for 87 units??? Price = 87. $1.42 or $  Complete Practice 8 problems on p. 495

 “Pricing Math” workbook assignment  “Building Workplace Skills” questions #1-7 on p. 498.

 The breakeven point is equal to the number of units that must be sold in order to cover all fixed or operational expenses.  It is the number of units that must be sold before any profit is made by a business.  Once the breakeven point has been reached, however, the profit per unit is equal to the price minus the variable cost per unit.  Example: Hot Dog Stand

1. Calculate Total Fixed or Operational costs 2. Calculate Total Variable costs (cost of materials or inventory) 3. Calculate Variable Cost per Unit Must calculate # of units sold first 4. Calculate Variable Cost Margin (profit per unit) 5. BEP = Total Fixed Costs/Variable Cost Margin 6. BEP$ = BEP. Selling Price

 Slope Intercept Formula: Y = MX + B  Pricing Formulas: Cost = (Cost per unit. Units) + Operating Expenses Revenue = Selling Price. Units  Break-even occurs when Cost = Revenue (Cost per unit. Units) + Operating Expenses = Selling Price. Units

LPHS Coffee Shop Equipment Costs: Microwave = $79 Coffee Brewer = $89 Blender = $119 Materials Cost per Unit: Coffee = $.45 Blended drinks = $. 75 Breakfast Sandwiches = $1.24 Prices:Coffee = $1 Blended Drinks = $2.50 Breakfast Sandwiches = $3

UNITS  Coffee: ($ ) + $89 $  Blended Drinks: ($ ) + $119 $  Breakfast Sandwiches: ($ ) + $79 $  Coffee: $1. 30 $30  Blended Drinks: $ $75  Breakfast Sandwiches: $3. 30 $90

Break-even in Units: Units = U Coffee:.45U + 89 = 1. U 89 =.55U or 162= U Blended Drinks:.75U = 2.5U 119 = 1.75U 68 = U Breakfast Sandwiches: 1.24U + 79 = 3U 79 = 1.76U 44.8 or 45 = U

UNITS  Coffee: ($ ) + $89 $179  Blended Drinks: ($ ) + $119 $269  Breakfast Sandwiches: ($ ) + $79 $327  Coffee: $ $200 Profit = 200 – 179 or $21  Blended Drinks: $ $500 Profit = 500 – 269 or $231  Breakfast Sandwiches: $ $600 Profit = 600 – 327 or $273