Unit III-1 - UnitIII TheRelationshipofMarkupto Profit...

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Unit III The Relationship of Markup to  Profit
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Initial Markup  is the difference between the billed  cost of merchandise and the original or first retail  price placed on a given item or group of items. An  initial markup  is expressed as a percentage of  the aggregate original retail price placed on the  merchandise— not  on the price at which the  merchandise may have been sold. Initial Markup
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For a department, an initial markup planned on a  seasonal and/or annual basis can be expressed in  either dollar figures or percentages and usually is  calculated for both. So when planning an initial markup, probable  expenses, the profit goal, probable reductions,  estimated alteration costs, and anticipated sales  must be projected first. Initial Markup
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When planning the initial markup the following  must be considered: Planning to achieve a favorable gross margin Forecasting the initial markup % Recognizing the gross margin figure and fluctuations Understand that the initial markup placed on new  purchases will be reduced by markdowns, shortages,  and employee discounts Be aware of and act on cash discounts offered  retailers on purchases of goods and alterations   Initial Markup
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§ CALCULATING THE INITIAL MARKUP The equation to determine initial markup includes  expenses + profits + markdowns + stock shortages +  employee discounts It can be simplified to expenses + profits = 
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This note was uploaded on 04/02/2012 for the course CTE 4822 taught by Professor Karlarenton during the Spring '12 term at Florida State College.

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Unit III-1 - UnitIII TheRelationshipofMarkupto Profit...

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