# math for retail buying unit 2

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1. price lining
the practice of determining the retail prices at which an assortment of merchandise will be carried.
2. price range
refers to the spread from the lowest to the highest price line carried.
3. price zone
refers to a series of price lines that are likely to appeal to one froup of the store's customers.
4. basic factors of pricing
• -wholesale costs
• -competition
• -price maintenance policies of manufactures ("suggested" retail price)
• -handeling and selling costs
• -store policies ("off-price" policy)
• -nature of the goods (markdown risk in fashion goods)
• -correlation among departments
• -supply and demand factors
• -simplifies customers choice, which facilitates selling
• -enables the store to offer wide assortments at best-selling price lines
• -simplifies buying by limiting the range of wholesale costs
• -reduces the size of stock, resulting inmore favorable stock turnover and decreased markdowns
• -simplifies stock control
• -decreases marking cost
• -provides a basis for stock/sales control of customer prefrences by price
6. three basic elements involved in the pricing of all godds
• -cost of merchandise
• -retail price
• -difference between them
7. markup
is the amount that is added to the cost proce of merchandise to arrive at a retail price.

• cost of goods
• - retail price
• = markup
8. markup percentage on retail
markup % = \$ markup/ retail
9. markup percentage on cost
markup % = \$ markup/ cost
10. markup % on entire purchase
= total \$ markup/ total retail
11. Retail
= cost/ 100% - markup%
12. Cost
=retail * (100% - markup%)
13. changes in price must properly recorded to:
• -achieve an accurate book inventory figure used in the retail method of inventory
• -plan initial markup goals when pricing goods
• -control and manage the amount received in an attempt to merchandise at a profit
14. retail reductions
• markdowns
• employee discounts
• shortages
15. Markdown
the lowering or reducing of the original or previous retail price on one item or a group of items
16. major aims of reductions
• to stimulate the sale of merchandise to which tcustomers are not responding satisfactorily
• to meet competitive prices
• provide open-to-buy money to purchase new merchandise
• creat special "promotions,"or sales
17. causes of markdowns
• pricing errors
• selling errors
• broken assortments
• remainders from special sales
18. suggested that merchandise be analyzed and reduced when
• merch becomes "slow selling"
• the customer demand is sufficient to sell the merch woth a minimum price reduction
• customer's intrest diminishes because of the appearance of a new fashion or product, or of a lower price
19. three price zones
• promotional (low)
• volume (medium)
• prestige (high)
20. it is difficult to generalize on the amount of the markdown to be taken because of the "right" price depends on:
• reason for the reduction
• nature of the merchandise
• time of the selling season (the proper moment during the selling season)
• quantity on hand
• original markup
21. rules in repricing
• the first markdown should be sharp enough to move a considerable amount of goods
• should be sufficiently large to attract customers who rejected the merch at the original price
• may me reduced sufficently to appral to the next price zone customer
• should not be so large to invite customer suspicion
• small markdowns are ineffective
• small, successive markdowns may increase the total loss
22. calculating markdowns
original or present retail - new retail = dollar markdown
23. percentage "off" method
dollar markdown = percentage off * present retail price
24. total dollar markdown (second markdown)
total markdown dollar = first total \$ markdown + second total \$ markdown
25. planned dollar markdowns
planned dollar markdown = net sales * markdown%
26. markdown%
markdown% = \$ markdown/ \$ net sales
27. markdown% in group of item
markdown% = \$ markdown/ total \$ sales of groups final selling price

• determine markdown per piece
• =original retail - markdown retail
• determine markdown amount
• =pieces * markdown per piece
• determine final selling price sales of group
• =(piece * original retail) + (piece * markdown retail)
28. markdown canellation
restoration of a markdown price to the former retail
29. markdown cancellation
= higher retail - markdown price
30. gross markdown
when a reduction in price is made originally
31. net markdown
difference betowwn gross markdown and markdown cancellation

= gross markdown - markdown cancellation