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38 Cards in this Set
- Front
- Back
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Net Sales
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The sales total after customer returns and allowances have been deducted from gross sales.
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COGS (Cost of Goods Sold)
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The cost of merchandise that has been sold during a given period
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Finding COGS
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Billed Cost of goods
+/- purchases, workroom, RTV, freight, cash disc., closing inventory = Gross Margin |
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GM (Gross Margin)
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The remainder after subtracting total cost of goods from the total retail amount of sales. Also called gross profit. The difference between net sales and the cost of goods sold
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Direct Expenses
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Expenses that exist only with a given department and cease if that department is discontinued
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Examples of Direct Expenses
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Supplies/ Delivery Miscellaneous Buying Costs Advertising Stock/clerical Department selling cost Selling salaries Travel Buyer salaries
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Indirect Expenses
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Expenses that consist of some store expenses which are prorated to all selling departments on the basis of sales volume
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Example of Indirect Expenses
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Security Utilities Insurance General Management Executive Salaries Rent Depreciation Maintenance
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Net Profit
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The difference between gross margin and operating expenses
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Contribution Margin
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The technique that evaluates the buyer's performance based on those expenses that are direct, controllable or a combination. It is the amount a department contributes to indirect expenses and profit.
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How to find Contribution Margin
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Gross Margin
- Direct Expenses |
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How do you maximize Net Sales
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Increase prices but sell same amount
Lower prices but sell more Increase prices and sell more |
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How do you minimize COGS
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Utilize discounts
Negotiate shipping and lower billed cost Alteration costs |
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How do you minimize Operating Expenses
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Negotiate advertising packages
Rent Evaluate sales costs |
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Calculating an increase or decrease from LY/Plan
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TY-LY/LY
Actual-Plan/Plan |
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% of sales
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Advertising, Gross margin, COGS, and rent
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% of purchases
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Cash discounts and RTV
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% of Gross sales
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Customer Returns
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How do you decrease the gross margin and profits
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Increase COGS
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How do you increase profit
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Increase net sales
Decrease COGS Decrease Operating Expenses |
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Quantity Discounts
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A percentage deduction from billed cost allowable when the dollar or unit amount on an order for goods falls within certain predesignated limits
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C.O.D. dating
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A form of dating in which payment must be made "on the spot" as delivery occurs
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Regular (ordinary) dating
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Discount date is calculated from date of invoice
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Trade Discounts
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A percentage or series of percentages deducted from a list price, thereby determining cost price
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Cash Discounts
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A percentage deducted from the costs of goods for conformance to prearranged terms of payment of an invoice between the vender and retailer
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Anticipation
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A discount earned by retailers, under certain conditions, for the payment of invoices prior to expiration of cash discount period.
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Figuring out regular dating
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x/y net z
x = amount of discount y= days that the discount is available z= when the net amount is due |
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Extra dating
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A specific number of days granted during which discount may be taken
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Figuring out extra dating
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w/y zx
w= amount of discount y+z = amount of days to get discount The buyer gets an additional 20 days after discount to make net payment |
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E.O.M. dating
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The cash discount period is computed from the end of the month in which the invoice is dated rather than from the date of the invoice itself
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Figuring out E.O.M dating
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Invoice July 10 - x/y EOM
x= amount of discount y= days into next month to recieve discount extra 20 days given for net payment ***If after the 25th part of next month |
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R.O.G. dating
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Receipt of goods used in dating terms to denote the beginning of a discount period
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Figuring out ROG dating
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x/y EOM/ROG
invoice July 20 recieved August 1 x= amount of discount y= days into next month after shipment is recieved to earn discount extra 20 days given for net payment |
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What discount is the best for retailers?
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R.O.G. dating gives them the most time
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FOB store
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Title changes hands at the store
vendor pays and assumes risks |
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FOB factory
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Title changes hands at the factory
store pays and assumes risks |
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FOB city destination
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Title changes hands at port of destination
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Prepaid
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Vender picks of freight charges
Responsibility is negotiated |
