Question

In: Accounting

Your department has planned sales of $573,500 for the season. The turnover goal for the season is...

Your department has planned sales of $573,500 for the season. The turnover goal for the season is 1.8. Using the form develop a six-month merchandise plan on the basis of the following information. Please submit your completed file in the essay Test 2 "assignment"

Markdowns: 13%

Operating expenses 40%

Profit 7.5%

Cash Discounts 1.9%

% of Season’s % of Season

Month Sales Markdowns

February 13% 15.5%

March 15% 12.5%

April 19% 16%

May 21% 18.5%

June 20% 18%

July 12% 19.5%

a. Calculate the initial markup %.

b.Distribute monthly planned sales.

c. Determine monthly dollar markdowns.

d. Determine BOM stock figures.

e. Find monthly planned purchases at retail.

F. Find monthly planned purchases at cost.

Expert Solution

a) Initial Mark-Up % = (Markdowns + Operating Expenses + Profit - Cash Disounts]/[Net Sales + Markdowns]

= (13% + 40% + 7.5% - 1.9%)/(100% + 13%) = 51.86%

b) Distribution of monthly planned sales

c) Total planned reduction in dollar value terms = 573,500 x 13% = $74,555

Distribute monthly planned reduction :

d) BOM stock figures

Before we determine Beginning of Month (BOM) stock figures, we need to know the Basic Stock figure.

1. Basic stock = Average Inventory – Average Monthly Sales
= (Sales ÷ Sales to Stock Ratio) – (Sales ÷ No. of Months)
= (573500/1.8) - (573500/6)
= 223,027.78

2. BOM Stock = Planned Monthly Sales + Basic Stock

e) Monthly planned purchases at retail

Monthly Planned Purchase = Sales for the month + EOM stock + Reduction Value – BOM stock

End of month stock of july is assumed as Average inventory (573500/1.8)

f) Monthly planned purchases at cost

Purchase Value at Cost price = Purchase Value at Retail Price x (1 – Initial markup)

ekkarill92 answered 2 hours ago

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