Question

What should be the initial markup percent in a department that has the following figures: Net sales $320,000 Markdowns 7,800 Expenses 105,000 Employee discounts 1,950 Shortages 2,750 Alterations 1,025 Cash discounts 950 Profit 7.5%

Answer 1

42.58%

Step-by-step explanation:

Calculation for What should be the initial markup percent

First step is to calculate the gross margin using this formula

Gross Margin = Profit + Expenses,

Let plug in the formula

Gross margin = 105,000+24,000

Gross margin= 129,000

Second step is to calculate the reduction using this formula

Reduction = Markdown + Employee discount + Shortages

Let plug in the formula

Reduction = 7,800+1,950+2,750

Reduction = 12,500

Last step is to calculate the Intial Markup Percentage using this formula

Intial Markup Percentage = ( Gross margin + Reduction + Alteration - Cash Discount) / (Sales + Reduction)

Let plug in the formula

Intial Markup Percentage = (129,000+12,500+1,025-950) / (320,000+12,500)

Intial Markup Percentage = =141,575/332,500

Intial Markup Percentage =42.58%

Therefore What should be the initial markup percent is 42.58%