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SELLING FASHION
5.03 Perform various
mathematical calculations
in retail sales.
Formulas
(cont.)
(cont.)
Retail Sales
Terms (cont.)
Initial markup: The difference
between merchandise cost and
the selling price originally
placed on the merchandise.
Keystone markup: A markup
equal to the cost of the
merchandise.
Keystoning: Doubling the cost
of the merchandise to arrive at
the retail price.
Retail Sales
Terms (cont.)
Maintained markup: The difference
between the total cost of the
merchandise and its final selling
price.
Must be high enough to cover expenses
and desired profit if the business is to be
successful
Basic Markup
Calculations
When cost and dollar markup are
known
Retail Price (RP) = Cost (C) + Markup (MU)
Example:
Retail Price (RP)=$55.00 (C) + $45.00 (MU)
Retail Price (RP) = $100.00
Basic Markup
Calculations (cont.)
When retail price and markup are
known
Cost (C) = Retail Price (RP) Markup (MU)
Example:
Cost (C) = $100.00 (RP) - $45.00 (MU)
Cost (C) = $55.00
Basic Markup
Calculations (cont.)
When retail price and cost are
known
Markup (MU) = Retail Price (RP) Cost (C)
Example:
Markup (MU) = $100.00 (RP) - $55.00 (C)
Markup (MU) = $45.00
Basic Markup
Calculations (cont.)
Markup percent based on retail
price
Used by most department and fashion
specialty stores
Markup % (MU%) = Markup (MU)
Retail Price (RP)
Example:
Markup % (MU%) = [$200 (RP) - $105 (C)]
$200 (RP)
Markup % (MU%) = $95 (MU) $200 (RP)
Markup % (MU%) = .475 or 47.5%
Basic Markup
Calculations (cont.)
Markup percent based on cost
Used by some small businesses
Markup % (MU%) = Markup (MU)
Cost (C)
Example:
Markup % (MU%) = [$210 (RP) - $120 (C)]
$120 (C)
Markup % (MU%) = $90 (MU) $120 (C)
Markup % (MU%) = .75 or 75%
Buying errors
Pricing errors
Special sales
Broken assortments
Reduction of goods
in stock
Calculate Markdown
Markdown (MD) = Retail Price (RP) X
Markdown percentage (MD%)
Example:
Markdown (MD)=$195.00 (RP) X 30%
(MD%)
Markdown (MD) = $58.50
Markdown Percentage
Usually calculated for a specific period of
time
Expressed as a percentage of net sales,
which cannot be calculated until the
merchandise is sold
Used in planning and forecasting
Markdown % (MD%) = Dollar Markdown
(DMD) Net Sales (NS)
Example:
Markdown % (MD%) = $10,000 (DMD)
$550,000 (NS)
Markdown % = .01818 or 1.8%