4.03 Solve Related Mathematical Problems

Opening Cash Fund

•The opening cash drawer contains the coins and currency for the day’s business

Till- a supply of money•Over = more $ than planned•Short = less $ than planned

Balancing the Cash Drawer•At end of shift, the drawer must be balanced

• Money must be counted • Balance report filled out

Completing a Sales Transaction•Extension- the result of multiplying the number of units by the cost per unit

1. Add item amounts (Subtotal)• Add like items first (item totals)• Add all item totals (subtotal)

2. Calculate sales tax• Subtotal x Sales tax %

3. Total• Subtotal + Sales tax

Completing a Sales Transaction

2 running shorts at $32.50 each3 pair of socks at $5 eachTax is 7.5%

2 x $32.50 = $65.003 x $ 5.00 = $15.00

$65.00 + $15.00 = $80.00

$80.00 x .075 = $6.00$80.00 + $6.00 =

$86.00

Student Response

1. 4 tennis balls at $3.50 each2 tennis rackets at $5.00 eachTax is 6.5%

2. 2 flyer sports ads at $1200.00 each7 glossy copies at $5.00 eachTax is 7%

3. 3 adult movie tickets at $9.50 each1 student ticket at $6.50 each1 Large popcorn $7.50 each2 Large sodas $ 3.25 eachTax is 6.0%

Types of Retail Sales• Cash sales include cash or checks

• Debit cards are bankcards or ATM cards – $$$ withdrawn from customers checking account

• Visa, MasterCard, American Express, and Discover are examples of credit cards

Cost of Merchandise Sold (CoMS)CoMS- total amount a retailer pays for merchandise

•Determined by quoted wholesale cost, discounts, and transportation charges

Cost-Discounts

+TransportationCoMS

Factors Affecting the Cost of Merchandise Sold

• Cost may be negotiable due to discounts and terms

Discounts – a reduction in the selling price offered by manufacturers and distributors to their customers to encourage prompt payment and stimulate purchasing

Allowances – free merchandise given by a manufacturer for large orders as a means of goodwill and to encourage future purchases

Explain the Difference Between Profit and Markup• Profit- the amount left from revenue (sales) after the costs of merchandise and expenses have been paid. • Expenses include such things as rent, utilities, and salaries.

• Markup- the difference between retail price and cost. • In order for a business to be profitable, its markup must be high enough to cover expenses and maintain desired profit.

Explain the Difference Between Profit and Markup

CoMS+Mark-UpRetail Price

(RP=C+ MU)

Total earning-CoMS-Light bill-Employee salaries

Profit

(There will be 2 types of profit)

Explain and Calculate Gross and Net ProfitGross profit- a business’ income minus the CoMS.

• Income for is the total of all sales for the time period minus any sales returns and allowances

• CoMS sold is the actual amount paid to the vendors for the merchandise

Net profit- what is left after all expenses have been paid by the business

Student Response

Difference Between Profit and Markup(each person in the group must write down their groups answers)

•As a group come up with one example to teach the class for each of the types of profit:

• Gross Profit• Net Profit

Calculate Retail Price

• The most basic pricing formula is the one for calculating retail price when given cost and dollar markup

RETAIL PRICE (RP)= COST(C) + MARKUP (MU) $500 = $300 + $200

RETAIL PRICE (RP) = COST(C) / 1-MARKUP % $500 = $300 / 1- 40%

Calculate Cost and Markup

• Formulas for cost and markup can easily be derived from the formula, RP=C+ MU.

C= RP – MU M= RP – C$300 = $500- $200 $200 = $500 - $300

Calculate Markup Percentage

• Markup percentage based on retail. When markup percentage is based on retail, retail price always equals 100 %. To determine markup percentage, divide dollar markup by retail price.

MU% BASED ON RETAIL= DOLLAR MU / RP 40% = $200 /

$500

Calculate Markup Percentage continued . . .

•Markup percentage based on cost. When markup percentage is based on cost, cost will always equal 100%. To determine markup percentage based on cost, divide dollar markup by cost.

MU% BASED ON COST = DOLLAR MU / C66.67% = $200 /

$300

Student Response

Difference Between Profit and Markup(each person in the group must write down their groups answers)

•As a group come up with one example to teach the class for each of the follow:

• Markup by Cost• Markup by %

Reasons for Markdowns

• Buying errors. Wrong styles, color, sizes, materials, and/or quantities have been purchased.• Pricing errors. Initial price may be set too high, leading customers to a lower price competitor.• Special sales. Regular stock may be marked down for a special sales event, or a retailer may buy particular goods to sell at promotional prices.

Calculate Markdowns• Markdowns are the most common type of price change.• Markdowns are used as a tool to stimulate sales, dispose of slow moving/discontinued merchandise, meet competitors’ prices and increase customer traffic.

MARKDOWN (MD) = RETAIL PRICE X MD% $25 = $100 X 25%

Find Markdown Percentage

• Markdowns are expressed as a percentage of net sales and cannot be calculated until merchandise is sold.• Markdown percentages are usually calculated for a specific period of time rather than on individual items.

MD%= DOLLAR MD / NET SALES1.8%= $10,000 / $550,000

Student Response

Difference Between Profit and Markup(each person in the group must write down their groups answers)

•As a group come up with one example to teach the class for each of the follow:

• Mark-down by Cost• Mark-down by %

Student Response (complete the following sales transactions)

1. 4 tennis balls at $3.50 each2 tennis rackets at $5.00 eachTax is 6.5%

2. 2 flyer sports ads at $1200.00 each7 glossy copies at $5.00 eachTax is 7%

3. 3 adult movie tickets at $9.50 each1 student ticket at $6.50 each1 Large popcorn $7.50 each2 Large sodas $ 3.25 eachTax is 6.0%

Difference Between Profit, Markup, & Mark down•Come up with one example for each of the follow:

• Gross Profit• Net Profit• Markup by Cost• Markup by %• Mark-down by Cost• Mark-down by %

Student Response (each student must turn in their work)