Chapter 2  Mathematics of Merchandising
2.1 
37
Introduction
Merchandising
Merchandising is a process that involves the buying and selling of goods (merchandise) from
the manufacturer, to the final sale of those goods to the consumers. The process can i
Chapter 2  Mathematics of Merchandising
2.4 
Markup
The cost (C) of the product is the amount paid for it after both trade discounts and cash discounts.
The amount of markup (MU), also known as margin or gross profit, is the difference between the
selli
Chapter 1  Ratios, Proportions, Percents, and Applications
1.5 
Currency Conversions
A very common application of proportions is the conversion of currencies between different countries.
Exchange Rates
Exchange rates:
used to convert
currencies between
84
Chapter 7  BreakEven and CostVolumeProfit Analysis
3
BREAKEVEN AND
COSTVOLUMEPROFIT ANALYSIS
In any business evaluation, a good understanding of how revenue and
costs change with the quantity produced and sold is important. It is also
necessary t
22
Chapter 1  Ratios, Proportions, Percents, and Applications
1.4 
Percent Increase and Decrease
c.
Introduction
A few quantities, such as the hourly rate of pay generally increases with time, while quantities such
as the price of an item during a sale
82
Chapter 2  Mathematics of Merchandising
CASE 2
Merchandising Cycle of a Product: Manufacturer to Consumer
Isabelle, a college student, enjoyed this chapter on the mathematics of merchandising and wanted to see for herself
how a product moves through t
172
Chapter 5  Compound Interest
15. A company was charged an interest amount of $18,071.02 on a loan of $100,000 that was compounding monthly
for three years. If the interest rate remains the same, how long will it take for the loan to accumulate an ad
64
Chapter 2  Mathematics of Merchandising
23. Zarita sells clay pots at her pottery studio for $30 each. The overhead expenses are $12 per pot and operating profit
is 30% on selling price.
a. What is her amount of markup per pot?
b. How much does it
36
Chapter 2  Mathematics of Merchandising
Have you ever wondered why prices of items sold at wholesalers like Costco
and WalMart are cheaper than prices of the same items sold at a convenience
store; why prices of items are cheaper online than at retai
Chapter 2  Mathematics of Merchandising

2
Review Exercises
Answers to oddnumbered problems are available online
For the following problems, express the answers rounded to two decimal places, wherever applicable.
1. A ream of paper was sold by a
14
Chapter 1  Ratios, Proportions, Percents, and Applications
19. A first semester class in a college has 9 more girls than boys and the ratio of the number of girls to boys in the class is 7 : 4.
a. How many students are there in the class?
b. If 4 g
Chapter 3  BreakEven and CostVolumeProfit Analysis
3.1 
85
Introduction to BreakEven and
CostVolumeProfit (CVP) Analysis
Breakeven point
is the point at which the
total revenue equals the
total costs.
In any business, the goal is to make a profit
2
Chapter 1  Ratios, Proportions, Percents, and Applications
Ratios are widely used in our daytoday lives to compare two or more
quantities. Ratios are also used by businesses to compare their performance
to the previous years performance or to industr
150
Chapter 5  Compound Interest
Time period (t):
the period of time, in
years, during which
interest is calculated.
5.2 
t = time period; it is the period of time (in years) during which interest is calculated.
The time period in the previous example,
Chapter 4  Simple Interest and Applications
32. The maturity value of an investment is three times the amount invested. The interest is 7.95% p.a. simple
interest. What is the term of the investment in years and days rounded up to the next day?
33. Ben
Chapter 1  Ratios, Proportions, Percents, and Applications
1.1 
Ratios
A ratio is a comparison or relationship between two or more quantities.
For example, Andy (A) invested $5000 and Barry (B) invested $4000 in a business. The comparison
of A's investm
Chapter 4  Simple Interest and Applications
17. Roanna borrowed $2500 at 7% p.a. She wanted to
settle this loan with two equal payments, one in
5 months and another in 16 months. Determine the
size of the payments using 'now' as the focal date.
18. Pho
166
Chapter 5  Compound Interest
22. Thomas, an architect, is expected to make a first payment of $4000 in one year and a second payment in four
years to a designer. Calculate his second payment if both these payments are economically equivalent to a si
98
Chapter 3  BreakEven and CostVolumeProfit Analysis
3.3 
Algebraic and Calculator Methods
for CVP Analysis
d.
The algebraic method of (CVP) analysis commences with the following profit equation:
Net Profit (PFT) = Total Revenue (TR)  Total Cost
32
Chapter 1  Ratios, Proportions, Percents, and Applications

1
Review Exercises
Answers to oddnumbered problems are available online
For the following problems, provide your answers rounded to two decimal places, wherever applicable.
1. Christ
Chapter 3  BreakEven and CostVolumeProfit Analysis
3.2 
17.
Graphical
Approach for CVP Analysis
(BreakEven Chart)
A breakeven chart is a graphical representation of the following on the same axes:
1. Fixed costs
2. Total costs at various levels
Chapter 2  Mathematics of Merchandising

2
SelfTest Exercises
Answers to all problems are available online
For the following problems, express the answers rounded to two decimal places, wherever applicable.
1. The net price of an item after trad
70
Chapter 2  Mathematics of Merchandising
25. Shirts were purchased for $12.50 each and were marked up by $16.75. During Christmas, they were discounted by $5.85
per shirt.
a. What is the rate of markdown?
b. What is the reduced selling price per shi
Chapter 3  BreakEven and CostVolumeProfit Analysis
3.4 
Contribution Margin (CM) Approach to
CVP Analysis
As defined earlier in Formula 3.1(f), the unit contribution margin (CM) is the amount
remaining from the sales per unit after deducting the vari
Laws 150
Business Law
Instructor: Barbro E. StalbeckerPountney
REQUIRED TEXT: Canadian Business Law 2nd Edition.
Emond Montgomery Publications
1
What Is Law?
Body of norms, or rules, by which society chooses to govern
itself.
a reflection of a society's
112
Chapter 3  BreakEven and CostVolumeProfit Analysis

3
SelfTest Exercises
Answers to all problems are available online
For the following problems, express the answers rounded to two decimal places, wherever applicable.
1. Audrey Manufacturi
Chapter 2  Mathematics of Merchandising
2.1 
37
Introduction
Merchandising
Merchandising is a process that involves the buying and selling of goods (merchandise) from
the manufacturer, to the final sale of those goods to the consumers. The process can i
Chapter 2  Mathematics of Merchandising
2
Summary of Notation and Formulas
notation
L = List Price
C = Cost
MD =
Markdown
d = Single Discount Rate
OE = Operating Expenses
BE = Breakeven price
d#L = Amount of Trade Discount
PFT = Net Profit
de =
10
Chapter 1  Ratios, Proportions, Percents, and Applications
1.2 
Proportions
When two sets of ratios are equal, we say that they are proportionate to each other. In the proportion
equation the ratios on the left side of the equation are equal to the r