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4
Merchandising
Mathematics
of
Chapter 4
McGraw-Hill Ryerson
Math of 4-2
4 Learning Objectives
Merchandising
4 Learning Objectives
Merchandising
Understand
LO 4. the ordinary dating notation for the
terms of payment of an invoice
Solve
LO 5. merchandise pricing problems
involving mark ups and markdowns
McGraw-Hill Ryerson
Math of 4-4
4
Merchandising
Middlemen
Manufacturer Receive
Distributor
varying
levels of
Wholesaler
trade
discounts
Retailer Consumer
McGraw-Hill Ryerson
Math of 4-5
4 Trade Discount
Merchandising
LO 1.
Calculating
Formula
Amount of discount = dL
Discount Rate List Price
McGraw-Hill Ryerson
Math of 4-6
4 Trade Discount
Merchandising
4 Trade Discount
Merchandising
4
Merchandising Trade Discount
LO 2.
Series Discounts
This refers to the giving of further
discounts as incentives for more sales. Middlemen
Distributor
For example 15% off first
then 10% off next Wholesaler
then a further 5% off next
4
Merchandising Trade Discount
Formula N = L(1 d)
N = L (1-d1) (1-d2) (1-d3)
= 20000(1-.2)(1-.10)(1-.05)
= 20000(.8)(.9)(.95)
= 20000(.6840) = $13680
McGraw-Hill Ryerson
Math of 4 - 10
4
Merchandising Trade Discount
4
Merchandising Trade Discount
4 = 100 (.8)(.92)(.98)
Merchandising
Step 1 Step 2
100 72.13
72.13
27.87
.8 100
.92
27.87
.98
27.87 %
McGraw-Hill Ryerson
Math of 4 - 13
4
Merchandising
McGraw-Hill Ryerson
Math of 4 - 14
4 Cash Discount
Merchandising
Returned Goods
Freight
No Cash Sales Tax
Discount
&
Trade Discounts
McGraw-Hill Ryerson
Math of 4 - 15
4 Cash Discount
Merchandising
McGraw-Hill Ryerson
Terms
Math of 4 - 16
4 Cash Discount
Merchandising
LO 4. Terms
4 Cash Discount
Merchandising
Formula N = L(1 d)
Invoice
$500 = $490
McGraw-Hill Ryerson
Math of 4 - 18
4 Partial Payments
Merchandising
4
Merchandising
Mark
&
Mark
McGraw-Hill Ryerson
Math of 4 - 20
4
Merchandising
LO 5.
Manufacturer Distributor
Selling
Cost Price
The price charged Wholesaler The price charged
to middlemen in to Consumers
The Distribution by Retailers
Chain
Retailer Consumer
McGraw-Hill Ryerson
Math of 4 - 21
4
Merchandising
4
Merchandising
Formula
Computer This
side up
4 Mark
Merchandising
% MarkUp is
Cost is 100%
The Rate
The Base
$ MarkUp is
The Portion
McGraw-Hill Ryerson
Math of 4 - 24
4 Mark
Merchandising
4 Mark
Merchandising
McGraw-Hill Ryerson
Math of 4 - 26
4 Mark
Merchandising
4 Mark
Merchandising
McGraw-Hill Ryerson
Math of 4 - 28
4 Mark
Merchandising
4 Mark
Merchandising
McGraw-Hill Ryerson
Math of 4 - 30
4 Mark
Merchandising
Becomes Formula on
on Selling
Cost Price
Selling Price (S) = Cost (C) + Markup (M)
Selling Price is 100% Cost is 100% % MarkUp is
Selling Price Cost
The Base The Base The Rate
$ MarkUp is
The Portion
McGraw-Hill Ryerson
Math of 4 - 31
4 Mark
Merchandising
4 Mark
Merchandising
4 Mark
Merchandising
4
Merchandising Mark
Converting
McGraw-Hill Ryerson
Math of 4 - 35
4 Mark
Merchandising
Converting 50%
33% MU
MU on
on Cost
SP = =? ?%%MU
MUononCost
S
% Markup on Selling Price % Markup on Cost
to to
% Markup on Cost % Markup on Selling Price
Formula Formula
% markup on S % markup on C
1 - % markup on S 1 + % markup on C
.33 .33 .50 .50
= = .50 = = .33
1 - .33 .67 1+ .50 1 .50
McGraw-Hill Ryerson
Math of 4 - 36
4
Merchandising
Mark
McGraw-Hill Ryerson
Math of 4 - 37
4 Mark
Merchandising
Formula
$Markdown
%Markdown =
Selling Price (original)
4 Mark
Merchandising
4
Merchandising
McGraw-Hill Ryerson