Question

The linen department has planned sales of $375,000 for the spring-summer season. The turnover goal for the season is 1.8. Using the form provided, develop a six-month merchandise plan on the basis of the following information: Markdowns 10% Operating expenses 40% Profit 5.5% Cash discounts 0.9% Month /o of Season's Sales % of Season's Markdowns February 16 15 March 15 18 April 16 15 May 17 20 June 19 16 July 17 16 (a) Calculate initial markup %. (b) Distribute monthly planned sales. (c) Determine monthly dollar markdowns. (d) Determine BOM stock figures. (e) Find monthly planned purchases at retail. (f) Find monthly planned purchases at cost.

Answer 1

To solve the given problems related to the linen department's merchandise plan, calculations are performed to determine the initial markup %, monthly planned sales, monthly dollar markdowns, BOM stock figures, monthly planned purchases at retail, and monthly planned purchases at cost.

Step-by-step explanation:

(a) To calculate the initial markup %, you can use the formula:

Initial Markup % = (1 + Desired Profit %)/(1 - Markdown % - Stock Turn %)

Substituting the given values:

Initial Markup % = (1 + 0.055)/(1 - 0.10 - 1.8) = 1.055/(-0.95) = -1.1053

Since the initial markup should be a positive percentage, we can get the absolute value:

Initial Markup % = |-1.1053| = 1.1053

(b) To distribute monthly planned sales, you can multiply the planned sales for the season ($375,000) by the percentage for each month:

February: $375,000 * 0.16 = $60,000

March: $375,000 * 0.15 = $56,250

April: $375,000 * 0.16 = $60,000

May: $375,000 * 0.17 = $63,750

June: $375,000 * 0.19 = $71,250

July: $375,000 * 0.17 = $63,750

(c) To determine monthly dollar markdowns, you can multiply the monthly planned sales by the markdown percentage:

February: $60,000 * 0.15 = $9,000

March: $56,250 * 0.18 = $10,125

April: $60,000 * 0.15 = $9,000

May: $63,750 * 0.20 = $12,750

June: $71,250 * 0.16 = $11,400

July: $63,750 * 0.16 = $10,200

(d) To determine BOM stock figures, you can subtract the monthly dollar markdowns from the monthly planned sales:

February: $60,000 - $9,000 = $51,000

March: $56,250 - $10,125 = $46,125

April: $60,000 - $9,000 = $51,000

May: $63,750 - $12,750 = $51,000

June: $71,250 - $11,400 = $59,850

July: $63,750 - $10,200 = $53,550

(e) To find monthly planned purchases at retail, you can calculate the net sales by subtracting the monthly dollar markdowns from the monthly planned sales:

February: $60,000 - $9,000 = $51,000

March: $56,250 - $10,125 = $46,125

April: $60,000 - $9,000 = $51,000

May: $63,750 - $12,750 = $51,000

June: $71,250 - $11,400 = $59,850

July: $63,750 - $10,200 = $53,550

(f) To find monthly planned purchases at cost, you can divide the monthly planned purchases at retail by the initial markup %:

February: $51,000 / 1.1053 = $46,131.16

March: $46,125 / 1.1053 = $41,741.83

April: $51,000 / 1.1053 = $46,131.16

May: $51,000 / 1.1053 = $46,131.16

June: $59,850 / 1.1053 = $54,020.69

July: $53,550 / 1.1053 = $48,437.89