Section 3 Markdown

1
Chapter 7

• Section 3 - Markdown

2
Objective 1

• Define the term markdown when applied to selling

3
Markdown

• Original Price Markdown Reduced Price
• The original selling price is always the base
  (100) and the percent markdown is always
  calculated on the original selling price.

4
Objective 2

• Calculate markdown, reduced price, and percent of
  markdown.

5
Markdown Computations

Original Price Markdown Reduced Price


6
Compute Reduced Price 1 of 1

• Original Price 28.95
• Markdown 25
• Markdown ________
• Reduced Price ________

P B x R
P 28.95 x 0.25
7.24
P 7.24
21.71
25
28.95
7.24
21.71
28.95 7.24
7
Compute Markdown 1 of 2

• Original Price 5.25
• Reduced Price 3.19
• Markdown ________

R P B
R 2.06 5.25
39.2
R .39238
?
R 39.2
39.2
5.25
3.19
5.25 3.19
2.06
8
Compute Markdown 2 of 2

• 16, page 286
• Original Price of Oak Desk 837.50
• Reduced Price 686.75
• Markdown ________

R P B
R 150.75 837.50
R .18
18
R 18
?
18
837.50
686.75
837.50 686.75
150.75
9
Compute Original Price 1 of 2

• Sale Price 68.95
• Markdown 30
• Original Price ________

B P R
B 68.95 .70
98.50
B 98.50
100 - 30
70
30
68.95
98.50
10
Compute Original Price 2 of 2

• Sale Price 7550
• Markdown 15
• Original Price ________

B P R
B 7550 .85
8882.35
B 8882.35
100 - 15
85
15
7550
8882.35
11
Objective 3

• Define the terms associated with loss.

12
Terminology

• When less than full retail price is attained, the
  result can be any of the following
• Reduced net profit
• Breaking even
• Operating loss
• Absolute loss

13
Diagram Reduced Net Profit
Cost
Operating Expenses
Net Profit
Selling Price
Reduced Net Profit
14
Diagram Breaking Even
Original Selling Price
Cost
Operating Expenses
Net Profit
Selling Price
Breaking Even
15
Diagram Operating Loss
Original Selling Price
Cost
Operating Expenses
Net Profit
Selling Price
Operating Loss
16
Diagram Absolute Loss
Original Selling Price
Cost
Operating Expenses
Net Profit
Selling Price
Absolute Loss
17
Review of Terms
Original Selling Price
Cost
Operating Expenses
Net Profit
18
Determine Profit or Loss 1 of 3

• Appliance Giant paid 400 for an energy-efficient
  refrigerator. If operating expenses are 30 of
  cost and the refrigerator is sold for 500, find
  the amount of profit or loss.

400 x .30
120
400
520
500
Operating Loss 20
19
Determine Loss 2 of 3

• 9, p. 285
• Cost 50
• Operating Expense ________
• Break Even Point 66
• Reduced Price 44
• Operating Loss ________
• Absolute Loss ________

66 50
Break Even Pt Cost
16
Break Even Pt Final Selling Price
22
66 44
Cost Final Selling Price
50 44
6
66
50
44
20
Determine Loss 3 of 3

• 12, p. 285
• Cost 156
• Operating Expense 44
• Break Even Point ________
• Reduced Price ________
• Operating Loss 60
• Absolute Loss ________

Cost Operating Expenses
156 44
200
140
Break Even Pt Operating Loss
200 - 60
Cost Final Selling Price
156 140
16
200
140
156
21
Determine Loss 2 of 4

• 19, p. 286
• Pep Boys Automotive paid 208.50 for a pickup
  truck bedliner. The original selling price was
  291.90, but this was marked down 35. If
  operating expenses are 28 of cost, find (a) the
  operating loss and (b) the absolute loss.

a) Operating Loss Break Even Pt. Final
Selling Price Operating Loss 266.88 - 189.74
77.14 b) Absolute Loss Cost Final Selling
Price Absolute Loss 208.50 - 189.74 18.76
Discount 291.90 x .35 102.165
Operating Expenses 208.50 x .28 58.38
Find the break even point
Determine the sale price
Break Even Pt 208.50 58.38 266.88
Sale Price 291.90 - 102.165 189.74
266.88
189.74
208.50
22
Textbook Problems

• 3, 4, 5, 10 page 285
• 17, 18, 20