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
  5. advantages of price lining
    • -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
    • buying errors
    • pricing errors
    • selling errors
    • broken assortments
    • necessary price adjustments
    • 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
  32. additional markup
    prica adjustment that raises the price of merchandise already in stock
  33. markup cancellations
    downward price ajustment that offsets an original inflated markup to a markup that is more normal
  34. need for an eficent system for reporting and recording price change
    • facilitation of the review of price adjustments
    • accurate calculations of inventory records
    • identification of shortages
Card Set
math for retail buying unit 2
math for retail buying unit 2
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