Advanced Fashion: Standard 7 Merchandising Math

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Advanced Fashion Standard 7Merchandising Math

• Created by Kris Caldwell
• Timpanogos High School

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Types of Financial Records

• Ledger A book or computer program containing
  ongoing accounts of a company
• Accounts Records of debits (subtractions of
  money) and credits (additions of money)

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Financial Records and Forms

• Operating Statement (also called an income
  statement) A summary of the financial results of
  the firms operations over a specified period of
  time.
• Cost of Goods Sold (COGS) The dollar amount
  spent on goods that have been sold to customers
  during the period.
• Gross Margin The sum of money available to
  cover expenses and generate a profit. Figured
  Total Sales COGS Gross Margin

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Financial Records and Forms

• Net Profit Resulting positive number after
  expenses have been deducted from the gross margin
  figure.
• Profit Margin Ratio that measures profit as a
  percentage of net sales return on sales (ROS)

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Sample Basic Operating (Income Statement)
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Terms to know

• Fixed costs Overhead expenses that remain the
  same regardless of sales volume.
• Variable costs Expenses that increase or
  decrease with the volume of sales or production.
• Odd-figure Pricing The retail pricing of
  merchandise a few cents less than a dollar
  denomination.
• Loss leader Low-priced articles on which stores
  make little or no profit because of lowering the
  price for promotional reasons.

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Terms to know

• Initial markup The difference between
  merchandise cost and the selling price originally
  placed on merchandise.
• Keystone markup Doubling the cost price to
  arrive at the retail price.
• Maintained markup The difference between gross
  merchandise cost and the net selling price of
  merchandise the initial markup minus all retail
  markdowns or other reductions

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Markups

• Markup The amount added to the cost of
  merchandise to determine the selling price.
• Calculating Markup There are 2 methods for
  calculating markup markup percent of cost
  (markup on cost) or markup percent of selling
  price (markup on retail). Both are based on
  percentage.

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Markup Percent of Cost
Markup of cost dollar markup
cost cost (Dollar markup cost is retail price
minus cost)
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Markup Percent of Selling Price
Markup of Selling Price Dollar markup
selling price
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Markdowns

• Markdown The difference between the previously
  marked selling price of an item and the reduced
  selling price.
• Calculated as either a percent of the original
  ticketed price or a percent of the marked-down
  selling price.

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Percent of the Original Ticketed Price
Ticket price x Markdown Markdown
Ticket price Markdown Selling Price
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Percent of the Marked-Down Selling Price
Markdown percent on net sales Total markdowns

Total Net Sales