Exam 4 Review

Exam 4 Review - MKT 3355 - Retail Management STUDY GUIDE...

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MKT 3355 - Retail Management STUDY GUIDE Examination Four (Chapters 16-20) Chapter 16: “Financial Merchandise Management” Financial Merchandise Plan: definition; what it specifies; purpose of it; what it details. Financial Merchandise Management  Occurs when a retailer specifies exactly which products (goods and services) are purchased, when products are purchased,  and how many products are purchased. 1. The purpose of financial merchandise management is to stipulate which products are bought by the retailer, when, and in what  quantity. Dollar control monitors inventory investment, while unit control relates to the amount of merchandise handled.  Financial merchandise management encompasses accounting methods, merchandise forecasts and budgets, unit control, and  integrated dollar and unit controls. Financial Merchandise Planning and Control : dollar control; unit control (what is considered a control unit) Dollar Control  Planning and monitoring the financial merchandise investment over a stated period.  Unit Control  Looks at the quantities of merchandise a retailer handles during a stated period.  Elements of Financial Merchandise Plan: Cost of merchandise available for sale; cost of goods sold; cost complement; planned purchases; open to buy. Methods of Accounting for Inventory : Cost method (major advantages and disadvantages); retail method (major advantages and disadvantages); which method gives retailers a tax advantage when inventory values are rising? Major disadvantage of cost method of accounting; in which method is it difficulty to adjust inventory methods to reflect style changes? How the determination of inventory value process differs using the cost method than that of using the retail method. Retail Method of Accounting  Determines closing inventory value by calculating the average relationship between the cost and retail values of merchandise  available for sale during a period. Two Methods of Setting the Cost of Inventory on Hand: LIFO vs. FIFO FIFO Method  Logically assumes old merchandise is sold first, while newer items remain in inventory. It matches inventory value with the  current cost structure.  LIFO Method  Assumes new merchandise is sold first, while older stock remains in inventory. It matches current sales with the current cost  structure.
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Cost Complement; Definition; how determined using total cost valuation and total retail valuation. Cost Complement  Average relationship of cost to retail value for all merchandise available for sale during a given time period. Deductions from retail value:
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This note was uploaded on 02/12/2010 for the course MTK 3355 taught by Professor Ruth during the Spring '09 term at Texas State.

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Exam 4 Review - MKT 3355 - Retail Management STUDY GUIDE...

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