Contemporary Mathematics for Business and Consumers Third Edition By: Robert A. Brechner COPYRIGHT © 2003 by South-Western, a division of Thomson Learning. Thomson Learning TM is a trademark used herein under license. ALL RIGHTS RESERVED. No part of this work covered by the copyright hereon may be reproduced or used in any form or by any means–graphic, electronic, or mechanical, including photocopying, recording, taping, Web distribution or information storage and retrieval systems–without the written permission of the publisher. For permission to use material from this text or product, contact us by Tel (800) Fax (800)

Chapter 8 Markup and Markdown Copyright © 2003 by South-Western.

Chapter 8, Markup and Markdown Section I Markup Based on Cost 8-1 Understanding and using the retailing equation to find cost, amount of markup, and selling price. 8-2 Calculating percent markup based on cost. 8-3 Calculating selling price when selling price and percent markup based on cost are know. 8-4 Calculating cost when selling price and percent markup based on cost are known.

Chapter 8, Markup and Markdown (Cont.) Section II Markup Based on Selling Price 8-5 Calculating percent markup based on selling price. 8-6 Calculating selling price when cost and percent markup based on selling price are known. 8-7 Calculating cost when selling price and percent markup based on selling price are known. 8-8 Converting percent markup based on cost to percent markup based on selling price, and vice versa.

Chapter 8, Markup and Markdown (Cont.) Section III Markdowns, Multiple Operations, and Perishable Goods 8-9 Determining the amount of markdown and the markdown percent Determining the sale price after a markdown and the original price before a markdown Computing the final selling price after a series of markups and markdowns Calculating selling price of perishable goods.

Section I, Markup Based on Cost Cost of Goods SoldOperating Expenses, or Overhead Markup, Markon, MarginRetailing equation Markup based on costMarkup based on selling price MarkdownMarkdown cancellation Sale priceStaple goods Seasonal goodsPerishable goods

Everybody’s Business Many Retailers use a psychological pricing strategy known as odd pricing, whereby prices are set to end in odd numbers such as $.79, $2.47, or $9.95. Theoretically, customers perceive odd prices as being substantially below even prices, and therefore a bargain. For example, $ is “perceived” as being much lower than $ Retailers, to psychologically project a prestigious image for their products, use even pricing such as $10.00 or $50.00.

8-2 Calculating Percent Markup Based on Cost 8-3 Calculating Selling Price When Cost and Percent Markup Based on Cost are Known Selling price = Cost (100% + Percent markup based on cost) SP = C (100% + % Mcost) Percent markup based on cost (rate = Markup (portion) or % Mcost = M Cost (base) C

8-4 Calculating cost When Selling Price and Percent Markup Base on Cost Are Known Cost = ___Selling price__ C = ____SP___ 100% + Percent markup on cost 100% + %Mcost 100% + Percent markup on cost 100% + %Mcost

Section II, Markup Based on Selling Price 8-5 Calculating Percent Markup Based on Selling Price Percent markup based on selling price (rate) = Markup (portion) Selling price (base) or %Msp=M SP

8-8 Converting Percent Markup Based on Cost to Percent markup Based on Selling Price, And Vise Versa Converting Percent Markup Base on Selling Price to Percent Markup Based on cost Percent markup based on selling price = Percent markup based on cost 100% + Percent markup based on cost Percent markup based on cost = Percent markup based on selling price 100% - Percent markup based on selling price

Section III, Markdowns, Multiple Operations, and Perishable Goods 8-9 Determining the Amount of Markdown and the Markdown Percent Amount of markdown Percent = Original selling price – Sale price Markdown percent = Amount of markdown Original selling price

Everybody’s Business Note that markdown percent calculations are an application of rate of decrease, covered in Chapter 6. In the percentage formula, the markdown (portion) represents the amount of the decrease, and the original selling price (base) represents the original amount.

8-10 Determining the Sale Price a After a Markdown and the Original Price Before a Markdown Sale price = Original selling price(100% - Markdown percent) Finding the Original Price before a Markdown Original selling price = Sale price 100% - Markdown percent

Everybody’s Business In a series of markups and markdowns, each calculation is based on the previous selling price.

8-12 Calculating the Selling Price of Perishable Goods Selling of perishables = Total expected selling price Total quantity – Anticipated spoilage

Selling price = Cost + Markup Cost = Selling price - Markup Markup = Selling price - Cost Percent markup COST Markup Cost Percent markup SP Markup Selling price Selling price = Cost ( 100% + % Markup COST ) Copyright © 2003 by South-Western = = Chapter 8, Section I

Copyright © 2003 by South-Western Chapter 8, Section I Selling price 100% + % Markup COST Cost 100% - % Markup SP Cost = Selling price (100% - %Markup SP ) %Markup COST 100% + %Markup COST %Markup SP 100% - %Markup SP = = = = Cost Selling price %Markup SP %Markup COST

Markdown% = Original price = Selling price PERISHABLES = Markdown = Original price - Sale price Sale price = Original price - Markdown Original Price = Sale price + Markdown Markdown Original price Sale price = Original price (100% - Markdown%) Sale price 100% - Markdown% Expected selling price Total quantity - Spoilage Copyright © 2003 by South-Western Chapter 8, Section I