1. 4.03 Solve Related Mathematical Problems

2. Opening Cash Fund
The opening cash drawer contains the coins and currency for the day’s business
The till is over if there is more money than planned
The till is short if there is less money than planned

3. Balancing the Cash Drawer
At end of shift, the drawer must be balanced
The money must be counted and a balance report filled out

4. Completing a Sales Transaction
The extension is the result of multiplying the number of units by the cost per unit
Add item amounts
Calculate sales tax and total

5. Completing a Sales Transaction
2 running shorts at $32.50 each
3 pair of socks at $5 each
Tax is 7.5%
2 x $32.50 = $65.00
3 x $ = $15.00
$ $15.00 = $80.00
$80.00 x .075 = $6.00
$ $6.00 = $86.00

6. Types of Retail Sales Cash sales include cash or checks
Debit cards are bankcards or ATM cards – funds are withdrawn from the customers checking account
Visa, MasterCard, American Express, and Discover are examples of credit cards

7. Cost of Merchandise Sold
The amount a retailer actually pays for merchandise
Determined by quoted wholesale cost, discounts, and transportation charges

8. 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

9. Explain the Difference Between Pricing and Markup
Profit is 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 is 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.

10. Explain and Calculate Gross and Net Profit
Gross profit is a business’ income minus the cost of goods sold.
Income for is the total of all sales for the time period minus any sales returns and allowances
Cost of goods (merchandise) sold is the actual amount paid to the vendors for the merchandise
Net profit is what is left after all expenses have been paid by the business

11. 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)
$ = $ $200

12. Calculate Cost and Markup
Formulas for cost and markup can easily be derived from the formula, RP=C+ MU.
C= RP – MU MU= RP – C
$300 = $500- $ $200 = $500 - $300

13. 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

14. 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 / C
66.67% = $200 / $300

15. 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.

16. 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%
$ = $ X 25%

17. 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 SALES
1.8%= $10, / $550,000