Essay about Retail Marketing Financial
PART A: Cost of goods sold = = = = PART B: Net Profit = Gross Profit – Operating Expenses Cost of merchandise available for sale – cost value of ending inventory ($260,000 + $500,000) - $275,000 $760,000 - $275,000 $485,000
First you have to calculate the Gross Profit: Gross Profit = = = Sales – Cost of Goods Sold $650,000 - $485,000 (calculated in Part A) $165,000
Now, you can calculate the net profit: Net Profit = = $165,000 - …show more content…
Total Merchandise available for sale (at cost) = $112,000 (Part A) - adjusted ending inventory at cost = - $5,600 (above) $106,000 = Cost of Good Sold
Sales – Cost of Goods Sold = Gross Profit $150,000 - $106,000 = $43,600
QUESTION # 4: A car dealer purchased multiple –disc CD players for $1175 each and desires a 40% markup (at retail). What retail price should be charged?
Markups can be computed on the basis of retail selling price or cost but are typically calculating using the retail price. Why? (1) Retail expenses, markdowns and profit are always stated as a percentage of sales. Thus, markups expressed as a percentage of sales are more meaningful. (2) Manufacturers quote selling prices and discounts to retails as percentage reductions from retail list prices. (3) Retail price data are more readily available than cost data. (4) Profitability seems smaller if expressed on the basis of price. The question is not the retailer wants to increase their cost by 40%. The question states that the retailer wants to make (in profit) 40%.